UST yields climbed across the curve, reacting to the mixed data releases on Friday. The 4Q17 GDP print came below expectation at +2.6%, against consensus +3.0%. However, sentiment was positive over robust consumer spending and business investment in the final quarter last year. On the other hand, durable goods orders expanded by 2.9% in Dec, higher than 0.8% forecast earlier. In addition, Brent crude oil was well anchored above $70/bbl, pressuring UST yields upward amid higher inflation expectation. Upcoming focus will be on FOMC scheduled on 1 Feb, where most of the players anticipate the Fed to hold rates unchanged.
Buying interest was sustained in MGS space alongside stronger MYR following the OPR hike a day prior. Apart from the 15y MGS reopening, trading activities were slanted towards short-dated papers, suspected to be driven by offshore flows. Notably, the 3m KLIBOR rose by 24bps to 3.68%, tracking the OPR. In our opinion, we are cautious on short dated papers in the event of ease in MYR strength.
Muted trading in Thai govvies. It was a quiet day for the bond market and outright activities declined to Bt80.23b last Friday. Thai bonds ended with small gain as yields declining about 1bp around the bellies. Foreign investors took profit at Bt2.97b as we approach the FOMC meeting.
IndoGBs extended losses amid weaker IDR on Friday. Net selling pressure was triggered by foreign onshore banks. Support came from locals as they took opportunity to buy on dips. Data showed foreign holdings dropped by more than IDR5t within the past two days. Market volume decreased a tad to about IDR21.4t whilst trades remained concentrated at the long end of the curve.
USD credits were generally stable amid mixed trading interest. Selling pressure in secondary space eased with longer UST pared losses ahead of the weekend. Meanwhile, Rhodium Resources will be meeting investors beginning 29 Jan. Aside, Export-Import Bank of India saw good demand with orders surpassed $1.8b for its $1b 10y bond issuance and priced at T+125bps.
Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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