FW: CIMB Fixed Income Daily - 03 Apr 2018 - TH inflation misses estimates

 

 

CIMB Fixed Income Daily - 03 Apr 2018 - TH inflation misses estimates 

 

US Treasuries started the week off on weaker note but the profit taking pressure was subdued with safe haven flows as equities markets continued to weaken. In macro data releases, the ISM manufacturing index was below estimates at reading of 59.3 for the month of March 2018, against 59.6 consensus and down from 60.8 reading in February. However, takeaway from the ISM numbers was the prices paid index which rose to a reading of 78.1 against 74.2 in February and beating consensus of 72.5. Prices paid saw increases in 17 out of 18 industries measured by the index.

 

Ringgit government bonds closed mildly weaker with lack of fresh drivers to guide sentiment. However, MYR remains well supported, hovering near 3.8620 late on Monday to limit short-tenor bonds within a tight range. The 3y MGS (MGS Nov’21) was about 1bp higher on the day, but on light volume.

 

In Thailand, bonds fluctuated in a tight range whilst trading activities were muted as several markets remained shut for Easter holiday. Meantime, players were waiting to see the bond switching result this week. Front-end yields continued to plummet with net-buying interest seen from foreign players as inflation was subdued in March. Thailand’s headline CPI rose 0.79% yoy, below the estimate of 0.97% yoy whilst core CPI was unchanged at 0.63% yoy in March due to low raw food prices. The lower-than-expected inflation data release should aid sentiment in the bond market in the short term period.

 

It was a pretty quiet day for IndoGBs on Easter Monday. Nevertheless, sentiment remained positive with interest seen along select tenors such as 7y FR70, 10y FR64 and 20y FR75. Demand came mostly from locals players despite some hints of profit taking. Bonds with 5y tenors mostly rose 2bps but 10y papers mostly fell by up to 4bps. Meantime, 15y bonds weakened by about 4bps but longer tenors fell about 3bps. Volume traded was steady amounting to IDR21.1t whilst trade was centered along the front and the bellies of the yield curve.

 

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