FW: CIMB Fixed Income Weekly - 04 Dec 2017 - Watchful eye on US data & events

 

 

US Treasuries

• We expect a cautious week ahead with sentiment to be driven by upbeat macro outlook now that the tax bill had passed the Senate.
• As we open this week, the 10T has dipped from 2.43% high. We have more pertinent economic data this week which will add on to the cautious sentiment. Up next is the Nov non-farm payrolls with consensus +199k against +261k in Oct. J. Powell's senate vote is on Tuesday according to the Senate Banking Committee, after his hearing with the committee was held last week. We expect little influence from Powell's ascendancy to the Fed chair, as his appointment is regarded as paving way for continuation of current Fed policy.
• Expect little movement in UST if all goes as expected. We anticipate 2x10 spread mildly wider at 65-70bps.

Malaysia

• It's going to be a cautious week with upside to yields as US tax reforms accelerates and UST yields on the rise as Asia opens. However, regional currencies were holding well with MYR below 4.1000 which should limit upside to MGS yields.
• The 10y MGS at 4.00% remains resistance. Meantime, reopening of 10y MGS was announced, at relatively small RM2.0b size plus RM0.5b private placement. We expect only mild influence on 10y yields ahead of tender closing on 6 Dec.
• Meantime, we still expect swap spreads to steepen further, expecting 5x5 spread to hold 15-20bps this week.

Indonesia

• As we open this week, the Nov CPI was released showing lower numbers. CPI for Nov was +3.3% yoy against 3.41% consensus and Oct's 3.58%. This was the lowest increase since last Dec. Core inflation decreased a tad to 3.05% yoy in Nov against 3.07% in Oct and consensus of +3.10% yoy. Yields are down 1-2bps along the bellies of the curve.
• With myriad of external drivers this week (mainly US) we expect a cautious week ahead despite the low inflation data   expecting 10y bonds to hover steady near 6.50% this week assuming rangebound UST yields.
  Think Before You Print
•  

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557
www.cimb.com
Find us on Bloomberg via CIMR <Go>

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