FW: CIMB Daily Fixed Income Commentary - 07 Sep 2017 - Trump deals with Dems on debt limit / Firm MYR and MPC to aid MGS

 

Market Roundup

• US Treasury yields hovered at lower ranges earlier in the day, before eventually rising ahead of the release of Fed Beige Book and as Trump's dealt with Democrats to extend government funding and the debt limit to 15 Dec as well as providing funds to states impacted by Hurricane Harvey. Risk sentiment generally improved with DJIA pared last Friday's losses and closed higher at 21807, while Brent crude climbed from $53.38/bbl to $54.20/bbl. On a separate note, Fed vice chair Stanley Fischer announced his resignation plan around 13 Oct, citing personal reasons.
• The Fed Beige Book indicated the overall economic activity expanded at a modest to moderate pace during the months of Jul and Aug. On the flipside, the labor market was generally tight while consumer prices ticked up modestly across the country. Elsewhere, the Fed highlighted Hurricane Harvey caused broad disruptions to the economic activity along the Gulf Coast, but the full impact is yet to be determined.
• Malaysia: Bonds posted mild gains Wednesday. Trading was slanted towards short to medium term papers led by GII Aug'24 and MGS Sep'17. Notably, USD/MYR dipped lower from 4.2600 to 4.2387, which would likely aid sentiment in the short term period, adding to support from Bank Negara expected to hold rates at MPC today.
• Economic data releases were upbeat. Malaysia's exports and imports grew by 30.9% and 21.8% yoy respectively, beating consensus +23.0% and +11.3% yoy. Meanwhile, foreign reserves inched higher to $100.5 billion as at 30 Aug, from $100.4 billion two weeks earlier. The amount is sufficient to fund 7.8 months of retained imports and equivalent to 1.1 times of short term external debt.
• Thailand: Thai bond curve flattened as long-ends outperformed led by firm auction of long-term 20-year LB366A with tight bidding range of 2.848%-2.865% and 3.38 bid-cover. Last yield traded was 2.85% or 5bps lower than previous day's level. North Korean tension strengthened demand for THB assets and foreign investors bought Thai bonds at Bt13.98 billion (Bt3.07 billion of which were front-ends).
• Indonesia: IndoGB opened on biddish tone Wednesday following successful bond auction. Offhore buying flows looked heavy in the morning session, sending yield curve down by 5-8 bps initially. However on London opening, players started to take profit. Despite the profit taking action, market remained well bid until close. Volume was steady amounting IDR22.6 trillion, dominated by medium and long term bonds.

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