Post MPC statement released yesterday, the bond market was slightly softer today as many expected a srr cut which didn’t happen.

                       

Today’s trade recap by our trading desk:-
·         Post MPC statement released yesterday, the bond market was slightly softer today as many expected a srr cut which didn’t happen. Some traders who were on bond-swap spread widening play started to realise some profits on the bonds while IRS started to move higher. Good 2-way price action was seen on the 7Y benchmarks as the yield curve closed higher by 2-bps today. MYR opened slightly stronger but ended the day around yesterday’s closing levels after April CPI YoY figure came in around the expected levels of +2.1%.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.235 +5.0 200 5-yr 3.400 +5.0 12 7-yr 3.765 +2.0 580 10-yr 3.845 +2.0 79 15-yr 4.195 +2.5 0 20-yr 4.315 +3.5 0 30-yr 4.675 0.0 16 Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.595 +2.5 3-yr 3.600 +2.0 5-yr 3.700 0.0 7-yr 3.855 +2.0 10-yr 4.020 +1.0 Source: Bloomberg, AmBank
Local News:
·         Malaysia’s inflation rate moderated to 2.1% in April following a 2.6% increase in the prior month, reflecting a slowdown in food and non-food inflation. The index for Food & Non-Alcoholic Beverages rose 4.2% y/y while the index for Non-Food recorded an increase of 1.2%. Core inflation, which excludes most volatile items of fresh food, as well as administered prices of goods and services rose 2.3% y/y in April 2016. ·         The international reserves of Bank Negara Malaysia amounted to US$97.2 billion as at 13 May 2016. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.2 times the short-term external debt.