FW: CIMB Fixed Income Daily - 10 Nov 2017 - Hurdles to US tax plan / MY bonds weighed by relatively hawkish policy tone

 

 

US Treasuries. The US Senate revealed its version of the tax plan which would delay corporate rate cuts until 2019, whilst markets have been punting for more immediate corporate tax cuts. Negotiations are ongoing to reconcile the House and Senate tax plans. It increasingly appears that the initial tax cut proposals that have excited markets may be watered down. UST closed mixed and rangebound.

Malaysia. Bonds were under kneejerk selling pressure driven by relatively hawkish policy statement by the central bank. The OPR was held at 3.00% as widely expected but policymakers are signaling reconsideration of its accommodative stance, citing strength of global and domestic macro conditions. In our opinion, Bank Negara may look into tightening its stance in the 1H2018 if economic data releases continue to be robust while inflation remains at high level. Heavy net selling was led by short dated MGS and the 7y MGS. MYR has firmed to below 4.1900.

Thailand. Bond curve shifted higher in the bellies by sell-off from foreign names in light trading with outright activities at Bt52.76b on Thursday. Yields of short-term CB bills continued to bounce from local funds' selling particularly from fixed income funds as we step into year-end. We think that yields appeared to be very well supported and 5-year benchmark LB22DA traded up to 1.857% causing widening 2x5 spread to 39.51bps.

Indonesia. Another quiet day for Indonesian bond market on Thursday. There was little buying of 10y bonds from offshore names and also buying interest for 5y papers.  Market moved in sideways amid a lack of catalyst from both domestic and global sides. Government will hold conventional bond auction next week with IDR15t target issuance. Volume fell to IDR5.1t and was dominated by bonds maturing in between 1 and 5y (35%) and also bonds maturing in between 5 and 10y (36%).
Asian Dollar Credits. USD credits widened a tad on Thursday, weighed by profit taking pressure after the recent heavy offerings from primary market. Elsewhere, China Minsheng HK Branch's 3y floating rate and fixed rate bonds were guided at 3m Libor+92bps and T+115bps respectively.


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CIMB Treasury & Markets Research-Fixed Income
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