FW: CIMB Fixed Income Daily - 21 Dec 2017 - Passage of tax bill drove UST yields higher

 

 

US Treasuries. UST yield curve further steepened, as yields continued to climb particularly on the long end after Congress passed the tax bill during mid-week. Technically, we expect some buying-on-dips interest with the 10T approaching its 2.60% resistance. Yields were also supported by firm economic data release, where existing home sales registered at 5.81m in Nov, above 5.53m projected earlier. Upcoming data on tap we have 3Q2017 GDP revision and PCE this week.

Malaysia. Malaysian government bonds were generally unchanged with trading activities concentrated on MGS Sep'18 and the 10y MGS benchmark. Bond market was mildly affected after the release of Nov CPI, which registered at +3.4%, in line with market expectation but was lower from +3.7% yoy a month ago.

Thailand. Bonds were in tight range and thin trade as investor paid less attention to MPC meeting with the outcome of steady policy rate at 1.5%, which was in line with all analysts' estimate according to Bloomberg survey. Before the MPC, 30-year LB466A auction drew firm demand from long-term fund and insurance companies and auctioned range was not in long tail with average yield at 3.12%. Curve shifted slightly higher at the back-end due to fund relocation to new supply of LB466A and increasing UST yields.  

Indonesia. IndoGB remained muted in the earlier session but we noted improved flows in the afternoon driven by short-squeezed in 7-10y segments, driving the yields lower by around 1bp. In our opinion, bond market is likely to see sideways movement heading into year end.

Asian Dollar Credits. USD credit market remained muted and seeing little changes during mid-week, as liquidity shrank heading into year end, despite the rise in overnight UST yields following the progress in US tax bill vote. Primary pipelines continued to extend (likely to be priced in early 2018) with names such as China Cinda and Philippines sovereign.

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