US Treasuries. UST yields inched higher despite there were doubts on Republicans' tax plan, while Fitch warned that the tax cuts will "significantly" increase US debt over the next decade earlier this week. On the flipside, German Council of Economic Experts suggested that ECB should "quickly reduce the purchases and end them earlier", citing the risks of market volatility.
Malaysia. MYR government bonds were modestly stronger mild bids on Wednesday amid a lack of drivers, plus with Bank Negara Malaysia MPC on Thursday expected to be have little influence on market direction (policymakers widely anticipated to hold rates and maintain its current 'accommodative' policy stance. Players also avoided making fresh bets ahead of incoming auctions of 10y GII and 15y MGS this month and speculation of large incoming corporate primary deals.
Thailand. Trade in the bond market was selective amid auction of new 50y benchmark LB676A but which received firm demand as expected. The market participated with 10% over allotment, 3.39%-3.468% range, and 2.17 bid-to-cover ratios. Meantime, the MPC left interest rate unchanged at 1.50% in a unanimous decision and without surprise. In the policy statement, the committee maintains optimism on economic growth and rising inflation. Exports and public spending remained key growth engines and domestic demand showed signs of improvements. We view interest rate will be steady for a longer period as low inflation condition provides space for MPC to keep monetary policy accommodative.
Indonesia. Indonesian government bonds posted mild weakness amid apparent offshore net selling activity, though we also heard there was defensive net buying among domestic players. In any case, volume traded was low amid little in fresh market drivers.
Asian Dollar Credits. Most Asian dollar bonds were under pressure due to weaker dealing in Chinese credits on Wednesday. This was amid heavy primary offerings by more Chinese names Bank of China and Agri Bank of China. The iTraxx Asia ex-Japan IG index was heard 4bps wider.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
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