Fwd: CIMB Fixed Income Daily - 03 Jan 2018 - Positive risk sentiment bear flattens UST curve

US Treasuries. UST weakened across the curve, reacting to the positive risk sentiment amid rise in stock prices, along with decent Markit Manufacturing PMI print in Dec (55.1 against consensus 55.0). Apart from several Fed speaks (Bullard, Harker and Mester), focus this week will be FOMC minutes and Dec NFP (consensus +20k) later this week which could point to an increase in probability for impending rate hikes and further bear flattening in the 2x10 which could hit the 30-40bps seen in the 2005 hike cycle – we reiterate our forecast for the 10y UST at 2.65% in 4Q17.

Malaysia. MYR bonds started off the year on firmer footing, aided by stronger MYR with USD/MYR dipped to near 4.00 on Monday. Aside, Bank Negara announced reopening auction for the 20y MGS. Issue size is RM2b for public tender, along with RM1b private placement. WI was heard quoted at 4.60/4.50%. The 3m KLIBOR was flat at 3.44% after inching up from 3.43% late Dec. In our opinion, the stronger MYR buoyed by rate hike anticipation will continue to aid sentiment in MYR bonds in the near term.

Thailand. Thai bond market closed for New Year's Day holidays from 1 to 2 January.

Indonesia. IndoGB was seen with strong offshore buying inflows particularly in very short dated bills. The indicative target for the auction will be IDR17t with new benchmark series to be issued (5y FR63, 10y FR64, 20y FR75) and 3m & 12m SPN bills. We think demand will be solid. Market volume in the first day of 2018 was big amounting to IDR17.5t and was dominated by bonds maturing in a year (49% of volume) and bonds maturing in more than 10 years (30% of volume). SaifulMujani  Research & Consulting reported an increase in President Widodo's approval rating with a likelihood for relection at the coming election.

Asian Dollar Credits. USD credits moved in sideways, awaiting primary pipelines announcement, despite risk sentiment was supported by rise in oil prices boosted by anti-government rally in Iran. As reported by Bloomberg, primary pipelines saw several names reported early this week, including Sawit Sumbermas, Chenming Paper and the Indonesia sovereign. Swire Properties was reported to have hired banks for the issuance of USD green bonds. Chinese coal company Yankuang Group will be meeting investors this week for a new dollar bonds after a 5% priced issuance in November, and Chinese issuers are expected to lead in 2018.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
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<Fixed Income Daily 030118.pdf>