FW: CIMB Fixed Income Weekly - 09 Jan 2018 - Regional bonds started off the year with firmer footing, supported by foreign demand

 

 

• US Treasuries
  o        Markets generally downplay Jan FOMC hike and expect a potential move in Mar. While the 2T yield continues it uptrend and lead the Fed Funds rate, we expect correction to set in eventually as Fed remains on its path of gradual rate hikes. As for this week, we think that UST will see consolidation awaiting new catalysts particularly from Fed-speakers.
• Malaysia
  o        MYR bonds saw decent buying interest but limited to short and medium dated papers, riding on the recent MYR strength. Assuming MYR strength is sustained, we believe that MYR bonds should see support this week, but gains are likely to be capped by profit taking pressure amid rate hike expectation ahead of Jan MPC later this month.
• Indonesia
  o        IDR sovereign bonds rallied on the back of rating upgrade by Fitch, low core inflation and healthy FX reserves reported. Foreign buying interest was also strong, pushing primary market demand. In our opinion, IDR bonds will extend gains alongside the expectation of low inflationary pressure ahead.
• Thailand
  o    Both IRS and sovereign yield curves were under downward pressure over the week. We noted foreign demand in shorter dated bonds, as THB strengthened. On top of that, BoT is expected to maintain its policy stance   this year due to low inflationary pressures. Ahead will be new supplies in the form of Bt25b LB22DA and Bt13b LB676A slated for 10 Jan.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557
www.cimb.com
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