FW: CIMB Fixed Income Weekly - 21 Nov 2017 - Strong GDP supports MY & TH markets

 

 

US Treasuries

• We expect mid to longer tenor UST to continue to show strength amid benign inflation outlook and current quiet over the tax bill, and at the same time short tenor UST impeded by anticipated Fed hike come Dec.
• Expect 2x10 spread to correct mildly upward to around 65-70bps after touching YTD low around 62bps in Asian trading Monday morning.

Malaysia

• We see the 3y MGS to be stable around 3.50% which is already a wide 50bps over OPR. In addition, firm 3Q2017 GDP is supporting MYR and thus front end of MGS curve. The Oct CPI is up this week (consensus +4.1% yoy against +4.3% in Sep) but should have little impact on short tenor yields.
• This leaves some steepening pressure on the bellies and far end of the curve, but IRS may see a faster impact - the 5x5 swap spread could test high of 15bps in the immediate term horizon.

Indonesia

• Last week domestic bond market strengthened a tad with 10y govvies down 4bps to 6.58%. Balance of payment surplus in 3Q2017 and healthy demand at the regular government bond auction were the drivers accompanying the market movement.
• Foreign holding in government bonds as at 16 Nov was about IDR816t or 38.6% of total tradable bonds. Buoyed by offshore demand and expected firm demand at this week's auction, we expect firm govvies this week with 10y bonds around 6.50%. We see little upward pressure on yields arising from contained growth, inflation and policy risks.

Thailand

• Thailand GDP reported an upbeat +4.3% yoy in 3Q2017 indicating firm fundamentals. We expect Baht will remain firm this week and front-end govvies will be in demand by offshore players.
• We opine the 5y part of the curve looks a tad steep and should flatten in the immediate term horizon – eyeing sub 1.90% levels.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557
www.cimb.com
Find us on Bloomberg via CIMR <Go>


Think Before You Print

******************************************************************************************************************************************************
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 ******************************************************************************************************************************************************