FW: CIMB Fixed Income Daily - 23 Oct 2017 - Progressing Tax Reforms

 

 

US Treasuries. US Treasuries weakened amid progression in Trump's tax reforms, after Senate approved the budget resolution ahead of weekend. Yields also rose on hawkish statement by Yellen including "reasons for series of soft inflation readings beginning in Mar are not immediately clear" but moving to hike too slowly provides its own risk.

Malaysia. MYR govvies ended relatively flat on Friday despite Sep CPI at +4.3% (in line with expectation but higher than Aug +3.7% yoy), driven by increase in transportation and food and beverage costs. Foreign reserves continued to climb - $101.4 billion as at 13 Oct, in contrast to $101.2 billion recorded two weeks earlier. We expect flows to remain thin ahead of Budget 2018, while we also await announcement of 30yr MGS reopening auction with expected size of RM2.0 billion.

Thailand. Trading activities were muted before the long weekend. Most Thai govvies steadied while profit taking pressure was limited to the bellies of the curve (up 1-2bps). Foreign investors trimmed Thai govvies for a second consecutive day and the baht weaken to the level about 33.17 at 5pm. The auction of 3-yr floating rate BoT bond maintained the buying momentum (auction saw 2.5x btc and average yield 1.5024%).

Indonesia. IndoGB was traded in tight range in the morning session last Friday but weakened after lunch break, as market reacted to the US senate adopting 2018 fiscal budget resolution and giving momentum to Trump's tax-cut plans. Similar to Thursday, most activities were seen on 7-10yr buckets, followed by 20yr bonds - triggered the rest of yield curve up by 2-4bps. Market volume fell to IDR8.7 trillion and was dominated by bonds maturing in over 10 years (43% of total volume).

Best Regards,

CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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