US Treasuries. UST yields were initially higher and the curve bear flattened, driven by stronger-than-expected ADP employment which recorded 250k job gains (consensus +190k). However, yields pared down a tad in the later session amid buying-on-dips interest. Meanwhile, St Louis Fed president Bullard said the tax reform will boost growth and investment, but it should not be pushing the inflationary pressure to the extent of having a faster tightening path.
Malaysia. Secondary space saw mixed trading interest with flows continued to be led by off-the-runs. The 20y MGS auction saw moderate demand with a btc of 1.905x for its RM2b issuance (public tender), with average yield generated at 4.607%. Post auction we saw it was traded at higher yield at 4.637% before eventually settling lower at 4.58%, in line with our expectations for the 20y yield to remain anchored near prior levels. Upcoming data on tap ahead of weekend will be trade numbers, where economists anticipate exports and imports to grow at 14.5% and 14.8% respectively in Nov.
Thailand. Most local investors looked to sell Thai government bonds on Thursday and profit taking flows were thick at LB26DA which lifted yield about 2-3bps along 8-9 year tenures, followed by selling interest of LB22DA ahead of next week's auction amount of Bt25bn on Jan 10. Foreign demand for short-ends or central bank bill (CB) was firm as USD/THB spot made lower lows since the beginning of 2018. This was alongside the 2018 New Year rally across the Asian currencies amidst USD weakness.
Indonesia. IndoGBs were traded firmer on Thursday following successful bond auction, as bidders turned to secondary market to buy bonds, particularly to buy auctioned benchmark series. Both real money buyers and short covers were seen on the bid side, whereas sellers only keen to offer bonds in normal size, causing imbalance in the market. Bonds was biddish until closing hours, small profit taking action was seen but market well supported until close. Market volume was still huge amounting to about IDR33t and dominated by bonds maturing in over 10 years (48% of volume).
Asian Dollar Credits. USD credits saw little changes post FOMC minutes release amid muted trading interest. Dalian Wanda Commercial Properties was downgraded by Fitch from BBB to BB+, citing "inability to access offshore funding channels to boost liquidity in a timely manner". Primary supplies are expected to be robust, as Bloomberg survey indicated that players are eyeing for $26-30b primary offerings this month, higher than average $21b over the past five years. Meantime, Lai Fung Holdings will be meeting potential investors beginning 8 Jan for its new issue, while Sri Lanka sovereign was reportedly looking for $2b issuance this year. Yingde Gases was reported by Bloomberg to market USD bonds from 5-Jan, apparently after the recent buyout by PAG Asia, resolution in a boardroom feud and rating on positive watch by S&P.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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