US Treasuries. UST appeared to be directionless and ended flat on Monday. Atlanta Fed president Bostic said that the three or four rate hikes may not be warranted due to the slow inflation. Meanwhile, Boston Fed president Rosengren suggested focus should be on inflation range, "with the potential to move within the range as optimal inflation rate changes," instead of a certain percentage target.
Malaysia. MGS space saw mixed trading interest with activities slanted towards front end and belly of the curve. Meantime, the 10y GII continued to attract flows and traded within narrow range of 4.12-4.13%. Overall the positive momentum in bond market took a breather with broadly stronger USD early this week.
Thailand. Thai bond yields posted decline by 1-2bps across all tenors on Mon except 5y bond which was well supported before the auction of LB22DA scheduled on Wed and 5y swap rate was corrected higher after touching 1.85% low last Fri. Overall trading activities on Mon were thinner than last Fri as foreign investors' buying flows eased after volatile movement in USD/THB that unexpectedly jumped to 32.2 after the test below 32.10 at the morning session.
Indonesia. IndoGB rallied further on Mon on the back of offshore buying inflows, as foreign banks were seen aggressively buying bills and bonds with tenures less than 1y, while real money flows from both offshore and locals preferred to buy in 5y and longer tenors. The 10y yield tested but failed to break the heavy resistance at 6.00%, and small profit taking was seen by end of the day. Today MoF will be holding 1st IDR sharia bond auction of the year with IDR8t target, we expect demand to be quite solid. Market volume increased to IDR27.7t and was dominated by bonds maturing in over 10 years (47%).
Asian Dollar Credits. Asian dollar credits extended gains, buoyed by positive risk sentiment on Monday. The lower-than-expected US NFP print was shrugged off by markets as investors anticipate Fed to continue its gradual rate normalization with first hike this year in Mar. In primary space, Times Property's 3NC2 bond was heard pricing around 6.625%, while Wharf's 10y paper was guided at T+135bps range.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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