FW: CIMB Fixed Income Daily - 14 Dec 2017 - UST yields fell as Fed maintains its 2018 & 2019 rate forecasts

 

 

US Treasuries. The Fed raised rate by 25bps in Dec meeting, in line with market expectation. However, UST yields dipped across the curve, after the Fed decided to maintain its Fed funds projection (made in Sep) for next two years. The dot plot indicated that majority of the Fed members are eyeing for three hikes in 2018. Apart from that, Fed members noted the "labor market continued to strengthen and economic activity has been rising at a solid rate", despite the hurricane impacts, and will remain the accommodative monetary policy stance.

Malaysia. MYR bond market continued to see sideways movement during mid-week while trading volume remained low heading into year end. Aside, WI for the 15y GII was seen bidding at 4.75%. IRS curve inched higher by 1-2bps, with exception on the 20y IRS, which dipped by 4bps on Wed.

Thailand. Thai sovereign curve bear steepened led by the auction of LB26DA that received in higher range of 2.42%-2.445%.  This cheaper bond price was   able to draw good demand at 2.07x btc and 10% over allotment, indicating  bond market sentiment did not deteriorate and investors were willing to buy at higher yield level as market bias toward higher yield into YE2017.

Indonesia. IndoGB traded mixed in thin volume for the entire day on Wednesday, although USD strengthened against IDR ahead of FOMC meeting. Some local buying flows were seen in afternoon session especially on 9-10y buckets, but market was generally muted. Today BI will be holding its monthly meeting, market consensus predicts BI to keep 7-days reverse repo rate unchanged at 4.25%. Market volume was steady amounting IDR13.8t and centered on bonds maturing between 1 and 10 years.

Asian Dollar Credits. Secondary trading in USD credit market remained muted. Primary market continued to see offerings emerged, possibly near the final issuances before the year end. Apart from China Orient's multi-tranches deal, Bank of Chongqing AT1 perp NC5 was heard pricing around 5.75%.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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