Monday, October 30, 2017

FW: CIMB Fixed Income Daily - 30 Oct 2017 - Malaysia’s fiscal consolidation on track

 

 

US Treasuries. US Treasuries strengthened with yields edging lower from recent peaks, driven by geopolitical risk. Catalonia declared independence from Spain while the Spanish government reacted by dissolving Catalonia's parliament and called for regional election on 21 Dec. Meanwhile, players turned cautious awaiting BoE and FOMC meetings, along with news on nomination of Fed chief.

Malaysia. Bonds were under pressure, tracking UST losses. Highlight was on Budget 2018 tabled on Friday, which indicate the 3.0% fiscal deficit to GDP for 2017 remains on track. Our calculations show that the RM39.9 billion deficit in 2017 leads to a gross domestic borrowing requirements of RM107.5 billion, and leaves a pretty light RM14.0 billion more to be issued this year in the remaining five auctions. In addition, based on targeted lower 2.8% deficit in 2018 and growth of 5.0-5.5%, we expect total MGS+GII offerings next year to be almost equal to 2017's at RM106.5-107.0 billion.

Thailand. Thai govvies yields, swap rates, and the SET index headed higher after Thai market returned to trade from the holiday but amid global risk backdrop. Bond and IRS curve bear-steepened after the US House passed the budget resolution. Fewer foreign names took profit in Thai bonds starting from 8y LB25DA - lifting the curve within 8-22y segment higher by 2-5bps. In late trading session last Friday, bidding interest among local players was very noticeable and we expect pent-up demand cap yield upside. Moreover, there will be no new LB issuance this week.  

Indonesia. IndoGB opened weaker Friday in line with strengthening USD currency against IDR, with wide bid-offer spreads. Before long, there was support for benchmark series 5y, 10y and 15y tenors, and also 20yr FR72.

Asian USD credits. China IG stood on firmer footing on the back demand for the China sovereign paper in secondary trading after being priced a day earlier.  However, we noted some profit-taking pressure, possibly due to caution ahead of BoE and FOMC meetings this week. In our opinion, USD credits may see pressure in the near term period after recent tight pricing.


Best Regards,

CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
Find us on Bloomberg at CIMR <Go>

******************************************************************************************************************************************************
Privileged/confidential information may be contained in this message. If this message is received by anyone other than the intended addressee, please return the message to the sender by replying to it and then delete the message from your computer. Unintended recipients are prohibited from taking action on the basis of information in this e-mail. No confidentiality or privilege is waived or lost by CIMB Group including its affiliates (CIMB Group) by any mistransmission of this e-mail. CIMB Group does not accept responsibility or liability for the accuracy or completeness of, or presence of any virus or disabling code in, this e-mail. CIMB Group reserves the right to monitor e-mail communications through its networks (in accordance with applicable laws). Opinions, conclusions, statements and other information in this message that do not relate to the official business of CIMB Group shall be understood as neither given nor endorsed by it.

CIMB Group Sdn Bhd (incorporated in Malaysia, (Company No: 706803-D)). Registered Office: 13th Floor, Menara CIMB, Jalan Stesen Sentral 2, Kuala Lumpur Sentral,, 50470 Kuala Lumpur, Malaysia.

Visit our website at www.cimb.com ******************************************************************************************************************************************************

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Related Posts with Thumbnails