CIMB Daily Fixed Income Commentary - 17 May 2016

Market Roundup

• US Treasuries closed weaker alongside higher German bund yields (after bund yields had fallen to a 4-week low recently) and reversal in risk-off sentiment amid upticks in stock markets and oil prices. The 10-year bund rose by to 1.92bps to 0.142% Monday. The disappointing Empire manufacturing index and NAHB housing index did little to stem UST losses. The Empire index fell to a reading of -9.02 in May against +6.50 consensus and the prior month’s +9.56.
• Ringgit sovereign bonds were dealt in mixed direction but moving within a narrow range on Monday. Focus was on the short dated papers namely MGS Feb’18 and MGS Mar’18. We think players were cautious ahead of this week MPC meeting.
• Thai govvies further weakened on persistent net selling pressure from foreign players. Similarly, Thai IRS rates inched up by about 1bp across the curve on Monday. Meanwhile, market is eyeing the LB666A auction scheduled for 18 May, with a target issuance size of Bt10 billion.  Elsewhere, Thailand’s 1Q2016 GDP grew at a faster pace at 3.2%, above market expectation of +2.8%.
• Indonesian government bonds came under selling pressure due to weaker Rupiah at the open on Monday. However the tone turned positive as the Apr trade balance showed better-than-expected number at (surplus) $$667 million (consensus +$168 million, previous +$497 million). Net buying interest was seen especially on the front end of the curve, while flows were mixed in the longer dated bonds. However, the tone was mostly biddish post-trade surplus data announcement.