FW: CIMB Fixed Income Daily - 27 Apr 2018 - Yields fall from 3.00%, ought to support bonds today

 

 

CIMB Fixed Income Daily - 27 Apr 2018 - Yields fall from 3.00%, ought to support bonds today

 

US Treasuries moved firm on Thursday, as demand crept into the bond market after recent days’ plunge and after 10T hit above 3.00% (it closed overnight at 2.98% and this morning at 2.9847%). This ought to support Asia’s bonds we markets open today. Support came also as ECB signaled it will not change monetary policy and admitting a ‘moderation’ in Euro Zone growth (Draghi said across countries and all sectors but added confidence inflation will move towards 2.00%). The European Central Bank will continue its asset purchases program till end September.

 

 

Malaysian government bonds consolidated Thursday though yields still ended up 2-4bps. We noted bargain hunting interest along the front and middle of the yield curve. However, spots of net selling activity were still observed. There was some net selling down along the 5-7y maturities but mostly along off-the-runs and GIIs. The 7y GII was seen up 6bps but the 10y GII maturing Jul’27 was not traded was (last at 4.28% a day prior). Aside, today we have tender closing for new 10y GII (GII Oct’28) at size RM4.0b. WI was 4.40/30% at its tightest heard Thursday. Amid the weak sentiment, we noted GII Jul’27 at 4.28%. Hence, auction of GII Oct’28 should attract interest at levels above 4.30%.

 

In Thailand, bonds bear steepened. Purchasing flows of the BoT open market operation (OMO) stopped through in the morning. session providing support for BoT bonds maturing 2-3y and LB-series maturing in 4-14y at total accepted amount of Bt18b. Therefore, Thai govvies curve was in a bear-steepening move as OMO contained upside risk in yield in the intermediate segment while long-term yields maintained the rising momentum at 1-2bps due to continued net selling pressure by foreign investors followed by local players.

 

On Thursday in Indonesia, there was improved sentiment in the bond market. Players have realized that yield had become attractive. FR64 was taken highest at 6.96%, down -17bps for the day. Net buying sentiment was suspected from local players and from offshore. Towards closing time, the market quieted down and FR64 closed at 7.0%.

 

CIMB Treasury & Markets Research-Fixed Income
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