US Treasuries. UST yield curve bear steepened, with selloff in longer dated papers. The 10T surpassed 2.50% but remained capped below 2.60% resistance. On the other hand, Minneapolis Fed president Kashkari said that he preferred to see the pickup of inflation and wages before rushing for further tightening.
Malaysia. MYR bond yield and IRS curves shifted higher on Tuesday. Sentiment was dampened by higher USD/MYR, tracking weakened CNY following the PBoC's new regime in calculating the currency's reference rate. Apart from that, we await announcement for the 5y GII reopening auction, with an expected issue size of RM2.5b.
Thailand. Bonds consolidated in tight range of 1bp on Tuesday before the auctions of LB22DA and LB676A. The auction demand may be challenging as there are two series to be sold from only one LB per week in the past. We see upside bias on yield along the belly due to supply risk of Bt25b with greenshoe option for the issuance of LB22DA on 10 Jan followed by the auction of 3y BoT209A on 18 Jan amounting Bt50b. This is much bigger than regular size of Bt15b per each auction in Dec 2017. Meantime, pent-up demand for ultra long LB676A will keep the yield relatively stable at the far end of the curve.
Indonesia. The 10y benchmark yield was unable to break strong resistance 6%, while IndoGB traded lower on Tuesday led by selling activities from foreign onshore banks, possibly due to strengthening USD against regional currencies. Support bids were still being provided by local players, although not aggressive, and yield curve closed higher by 7-9bps. In the primary market though, MoF received impressive IDR32.2t incoming bids at the sharia bond auction, indicating healthy demand paticularly from locals accounts. The issuance size was IDR13t, higher than IDR8t indicative target. Market volume remained stable amounting to IDR27.5t whilst activities concentrated in the belly of the curve.
Asian Dollar Credits. USD credits remained well supported in conjunction with tighter CDS spreads. Sovereign bonds were seen taking a breather after trading tighter early this week. Primary flows remained robust on Tuesday. Country Garden's 5NC3 and 7NC4 bonds were heard pricing around 4.75% and 5.20% respectively, while guidance for the Puma Energy's 8NC3 bond was at 5.25%.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
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