FW: CIMB Fixed Income Daily - 20 Dec 2017 - Tax bill pending House revote

 

 

US Treasuries. UST yields rose across the curve, as the tax bill passed in the House on Tuesday. However, markets turned slightly guarded after the news reported that the House has to revote due to the violation of Senate rules. Elsewhere, Dallas Fed president Kaplan revealed his concern over the flattening yield curve, which "limits the Fed's operating flexibility, in terms of how fast and how much they can raise rates".

Malaysia. MYR sovereign bonds settled relatively flat as activities remained thin on Tuesday. Similarly, USD/MYR continued to trade sideways around 4.0800. Due to the lack of fresh catalyst (apart from auction calendar), we expect range trading to persist heading into long weekend.

Thailand. Bond yields fluctuated in tight range as players had little interest to take position before year-end and some would like to wait for the MPC meeting and LB466A auction. We think that the MPC will leave interest rate at 1.50% and policy makers will express positive comment on the Thai economy and inflation. Moreover, exports, tourism, government spending, and recovery in domestic demand are likely to be found in the policy statement on top of comment that the central bank will protect financial stability and at the same tome keep monetary condition accommodative to support economic growth.

Indonesia. IDR sovereign bond market stayed muted particularly in the morning session. We noted bond market turned more active with net buying interest in the later session especially on the 10y benchmark bond, possibly driven by short covering activities. Buying flows eventually spurred into longer tenure papers up to 15y.

Asian Dollar Credits. USD credits were largely stable given the fact that flows remained thin ahead of year end. Jiaxing City was heard meeting potential investors for its USD issuance beginning 19 Dec. Similar to the poor liquidity in secondary space, we expect primary activities to shrink for the remainder this year until markets resume in Jan.

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