US Treasuries. Treasury yield curve further flattened on Friday. UST yields climbed mainly on the front end, boosted by better risk sentiment after the Republicans released the final version of tax bill ahead of the weekend,. Elsewhere, industrial production expanded by 0.2% in Nov, below 0.3% forecasted earlier. The few Republican senators (Rubio, Collins, and Corker) who were initially opposed to the tax reform bill have now switched to supporting the tax legislation. The Republicans' draft of the bill aims to slash the corporate rate to 21%, and is expected to go to the house and senate for a vote by this week.
Malaysia. Malaysian sovereign bonds moved sideways with flows driven by demand in short dated papers, despite USD/MYR settled flat around 4.0800 on Friday. Expect trading activities to remain muted, unless there is significant move in UST driven by tax bill vote. Aside, data on tap this week will be Nov CPI, which is anticipated to slow to +3.4% from +3.7% yoy in Oct. Bonds should remain supported if CPI continues as consensus expectations.
Thailand. Thai govvies curve bull flattened as yield in belly and far-end went down by 2-3bps due to demand for long-ends following UST curve movement. Demand for front-ends strengthened and the auction of 14D BOT bill stayed firm amid foreign inflows to short-ends at Bt7.53bn last Fri attributed by the Baht's appreciation throughout the week .
Indonesia. As widely expected, BI left the 7d reverse repo rate at 4.25% and the bond market has reacted little. Volume was thin but there was domestic interest for 10y and 15y bonds. On Friday, the Nov trade balance data also didn't trigger action on the bond market - trade surplus was $127m, or lower than expected $844m. We expect IndoGB to move to be sideways in tight ranges in the coming week ahead of the holiday period.
Asian Dollar Credits. USD credit market continued to see muted trading interest post several major central banks' meetings, while primary deals are expected to diminish in the coming weeks. In primary space, China Logistics Property was reportedly looking to tap on its existing bond maturing 2020.
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CIMB Treasury & Markets Research-Fixed Income
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