FW: CIMB Fixed Income Daily - 04 Apr 2018 - Bonds mixed awaiting more drivers with NFP on tap later in the week

 

 

CIMB Fixed Income Daily - 04 Apr 2018 - Bonds mixed awaiting more drivers with NFP on tap later in the week

 

US Treasuries moved weaker on profit taking pressures with limited drivers on the day. Markets are awaiting the March US jobs report with consensus for non-farm payrolls at a pretty strong 185k versus 313k in February. At +185k still brings average for Jan-Mar 2018 at a firm 246k per month. In other news, San Francisco Fed president John Williams has been named successor to William Dudley as New York Fed president. Williams is usually known as relatively hawkish in terms of monetary policy, and suits well with Fed’s ongoing though gradual tightening stance. We still expect some steepening to occur with 2x10 anticipated around 53bps later this week.

 

Malaysia’s government bonds were dealt firmer on relatively active volume, following overnight UST gains and continued firm MYR versus USD whilst crude oil price remain pretty steady (Brent around $68.05 per barrel). Malaysia’s market remains largely unaffected awaiting announcement for this year’s general elections. Heavier flows were seen along short tenor MGS Sep’18 (+2bps to 3.16%) and GII Apr’22 (unchanged at 3.82%). The 3y MGS (MGS Nov’21) was firm at 3.46%.

 

Bond yields relatively steadied on Tuesday as the source bonds and the destination bonds were trading during  the  submission period of 3-4 Apr. Price effect from the  bond switching will be released and finished within this week as we approach to the final day of allotment date on 4 Apr.

 

IndoGB saw limited movement on Tuesday with concerns over global trade conflict limiting flows. There were still some strong bids on the belly and tail of the curve but tempered with local players taking opportunity to take profits. As for the sharia auction, incoming bids were only IDR11.2t and MoF downsized the issuance from IDR 8t to IDR6.8t. Market volume decreased to IDR17.4t and trade concentration shifted back to the tail end of the curve.

 

 

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