US Treasuries. UST curve ended flatter, as long end yields dipped and front end yields holding up well. The 2x10 spread continued narrowing down to 56bps from 63bps two days ago. Flows were driven by weaker-than-expected economic data and ECB minutes releases on Thursday. The PPI declined by 0.1% mom in Dec, in contrast to 0.2% gain projected earlier. On the flipside, ECB minutes revealed that the central bank sees positive growth outlook and may consider revisiting its policy guidance early this year.
Malaysia. MYR govvies were dealt slightly firmer, aided by stronger MYR and correction in UST on Thursday. Despite the gains in MYR bonds, IRS rates were generally stable and little changed. Elsewhere, WI was heard taken at 3.83% for the 5y GII. With MYR strength sustained in the near term period, we think that 5y MGS will be well supported around 3.55%, leaving a decent 28bps spread against 5y GII, compared to median spread of 16bps over the past one year. As for the 5y GII auction, we expect it to be priced at the range of 3.80-3.84% amid better sentiment.
Thailand. Thai bond curve bull flattened and the yields declined by 2-3bps in the intermediates with LB22DA traded below 1.80%. Bidding environment had underpinned demand for the bond as banks and asset managers managed portfolio at the beginning of 2018.
Indonesia. IndoGB strengthened on Thursday reversing previous day's losses tracking the strengthening UST. Market was seen little impacted by the news of China halting purchases of UST. Yields went back to Tuesday's level as market was still well supported by local players. Strong bids were seen especially in the afternoon session. Market volume kept decreasing to IDR 20t whilst trades clustered at the long end of the curve.
Asian Dollar Credits. USD credits were firmer, aided by decline in UST yields. Sentiment was stable while risky assets remained in favour despite mixed performance in Asian stock markets. Primary supplies remained robust. Petron Corp was heard pricing its perp NC5 at the range of 4.60-4.70%, while SEA Holdings' 5y bond was guided in between 4.875-5.000%. Golden Wheel's 3y bond was indicated at 7.25%.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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