Fixed Income Daily Pulse, 19 May 2016

Today’s trade recap by our trading desk:-
·         MGS/GII opened softer this morning as UST 10y spiked overnight after the release of Fed meeting minutes which indicates the likelihood of a US rate hike in June if data improves. There was some selling pressure from local players on MGS 8/23 and GII 9/26 in particular before rebounding back after the announcement of new issue 10.5y MGS 11/26. The bond with issue size of RM 4 Billion was seen dealing at 3.865%-3.81%. Towards the end of the day, there was slight buying interest on the shorter ends of the curve. In the MPC statement released later in the evening, BNM maintained the OPR rate at 3.25% as forecast. MGS curve was little changed at the closing.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.185 -1.5 34 5-yr 3.350 0.0 70 7-yr 3.745 +1.0 563 10-yr 3.825 0.0 145 15-yr 4.170 0.0 21 20-yr 4.280 - - 30-yr 4.675 - - Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.560 +0.5 3-yr 3.575 +2.0 5-yr 3.685 +1.5 7-yr 3.815 -1.0 10-yr 4.010 2.0 Source: Bloomberg, AmBank
Local News:
·         Bank Negara Malaysia maintained the Overnight Policy Rate (OPR) at 3.25% with the stance of monetary policy is accommodative and supportive of economic activity.