FW: CIMB Fixed Income Daily - 05 Feb 2018 - Positive job data sent UST yields higher

 

 

UST yield curve bear steepened, as yields were pushed higher by positive employment data. NFP print came better-than-expected at 200k in Jan, above consensus 180k job gains. Apart from that, average hourly earnings accelerated at a fast pace of 0.3% on monthly basis, while unemployment rate stood unchanged at 4.1% during the same period. On a separate note, San Francisco Fed president Williams sees option for three to four hikes this year, alongside healthy growth, low unemployment and rising inflation.

MYR sovereign bonds closed on firmer tone after market reopened on Friday. Gains were aided by stronger MYR against USD, with little impact from weakened UST. Elsewhere, Bank Negara announced auction details for the new 7y GII benchmark. Issuance size will come in at RM3b for the public tender plus another RM1b in a private placement. WI was quoted at 4.15/05% this morning. In our opinion, players are likely to stay cautious in the near term period due to the persistent pressure from UST.

Thai bonds traded with mild fluctuation within 1bp. Local investors looked less worried about external higher yield environment and some players continued to accumulate bonds when yields rose to buying-on-dips interest level. Meanwhile, foreign investors reduced position in Thai bonds at net selling position of Bt2.06b on Friday before the release of Jan US NFP report.

Weaker IDR bonds tracking UST. IndoGB had a rollercoaster ride on Friday, with foreign onshore banks appeared as sellers during opening hours, tracking higher UST yields, which sent IDR sovereign yields up by 5-10bps. However, local real money players kept supporting the market and reversed the tone until the break. In the end, as market became relatively quiet in afternoon and bond prices edged marginally lower. Market volume fell to IDR22t and trade concentration shifted to the belly of the curve.

Asian dollar credits closed on softer tone amid cautious stance awaiting US NFP data on Friday. Pressure was seen in secondary trading with selling pressure persisted in UST. Elsewhere, Fujian Zhanglong will be meeting investors beginning 5 Feb for its new USD issuance.

Best Regards,
CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
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