US Treasuries. Treasuries continued to weaken as markets awaited the FOMC meeting and anticipated rate hike. Meantime, PPI final demand was higher than expected at +0.4% mom (0.3% consensus). However, the longer tenures regained some ground on the back of solid 30T auction. The $30b auction saw 2.48x btc against 2.30x at past 12 prior similar auctions, with high yield at 2.804% (WI at 2.808%). Indirect bidders, which include foreign central banks ended up with 61.9% of the amount sold against 63.2% at the 12 prior auctions.
Malaysia. Malaysian sovereign bonds were dealt sideways while trading flows remained thin on Tuesday. As for the primary segment, Bank Negara Malaysia announced new 15y GII auction with a public tender size of RM2.0b, alongside RM0.5b for private placement.
Thailand. LB26DA rose 2bps to mid-rate of 2.41% before the auction and we expect 2.42% at today's bond sale will draw market attention. Market still has interest in Thai govvies but on higher yield to compensate risk of Fed's normalizing path. Front-ends demand appeared firm and the auction of 3m and 6m central bank papers received firm demand and lower yield than previous auctions. Offshore investors also supported the front-ends with net buy position at Bt8.20b on Tue, weighing on rising USD/THB.
Indonesia. IndoGB were generally traded sideways on Tuesday, with some local buying flows seen on 2y and 7y papers. However, prices gradually fell near closing time on the back of USD strengthening at London open, triggering mild selling actions on 10y benchmark bond. Volume increased to IDR13.5t and was dominated by medium and long term bonds.
Asian Dollar Credits. USD credits continued to see muted interest. Secondary trading mildly weakened, as buying interest was dampened by guarded sentiment ahead of key central bank meetings scheduled this week. Elsewhere, Yangzhou Urban's 3y bond was guided at T+245bps.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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