The US

The dollar index fell slightly by 0.08% to 103.26 following US inflation data. Report showed that the inflation rate slowed to 6.4% y/y in January of 2023 from 6.5% in December but above the market forecasts of 6.2%. Still, it is the smallest increase since October of 2021. Underlying inflation growth also slowed to 5.6% y/y from 5.7% y/y.

Nevertheless, Fed officials reiterated the need to stay hawkish. Both Richmond Fed President Thomas Barkin and Dallas Fed President Lorie Logan voiced the same message of raising interest rate to fight inflation as it is still far away from Fed’s target. And Philadelphia President Patrick Harker stated that the interest rate could land above 5.0%.

US Equities & Sovereign Bonds

Wall Street closed mixed as the Dow Jones fell 0.46% to 34,089, S&P500 edged lower by 0.03% to 4,136 but Nasdaq rose 0.57% to 11,960.

The UST10Y benchmark yield added 4.2bps to 4.190% while the UST2Y added 9.8bps to 4.615%, widening the inverted differential to 87.2bps.

Eurozone

The Euro gained 0.14% to 1.074. On the macro front, the number of employed persons in the Euro Area rose by 0.4% q/q to 165.07 million in the 4Q2022, marking the seventh straight quarter of employment gains.

The UK

The British pound climbed 0.28% to 1.217. Labour market in the UK remains robust as the number of people claiming for unemployment benefits fell by 12.9k in January 2023, after a 3.2k contraction in December. Also, the number of people in work grew by 74k in the three months to December 2022, well above market expectations of a 40k growth. This may build the case for the BoE to tighten further.

Japan

The Yen depreciated 0.56% to 133.16. The Japanese economy grew by 0.2% q/q in 4Q2022, erasing the 0.3% contraction in Q32022 but falling short of market expectations of a 0.5% growth. The growth was driven mainly by private consumption due to the removal of pandemic border controls, while government spending rose during the same period. For the whole year, the economy advanced 1.1%, lower than 2.1% in 2021, which is in line with overall momentum among global economies.

China

The Yuan weakened 0.14% to 6.828. While the recovery from Covid pandemic has provided some support for the currency, indications that the US interest rate would continue to be on an upward trajectory limited the currency gain.

South Korea

The Won appreciated 0.64% to 1,269. According to the Bank of Korea (BOK), the import price index was at 134.95 in January 2023, down 2.3% m/m and falling for a third straight month partly due to the local currency's weaker position against the U.S. dollar

Australia

The Aussie Dollar rose 0.29% to 0.699. There is a divergence of sentiment in the economy as the consumer sentiment index fell to 78.5 as pointed by Westpac-Melbourne Institute Index while the business confidence index rose to 6 as indicated by NAB Australia.

Crude Oil

Oil price traded lower due to mounting supplies as the US Department of Energy (DoE) stated on Monday that it would sell 26 million barrels from the strategic petroleum reserve (SPR), which is already at the lowest level since 1983. Brent dropped 1.19% to US$85 per barrel and WTI sank 1.35% to US$79 per barrel.

Gold

Gold Price Inched Higher Slightly by 0.04% to US$1,854/oz.

Malaysia Highlights

The ringgit strengthened 0.29% to 4.348. The Malaysian PM said that the government will tackle its rising debt levels through reducing subsidies and good governance instead of imposing new, broad-based consumption taxes.

Ringgit Outlook for the Day

We expect the MYR to trade between our support level of 4.290 and 4.300 while our resistance is pinned at 4.360 and 4.370.

FBM KLCI

The FBM KLCI gained 0.60% to 1,484. Detailed transactions showed that the local retailers were the net sellers with RM18.7 million, offset by the local institutions and foreign investors net buying flow of RM16.2 million and RM2.49 million, respectively.

Fixed Income

The benchmark yield MGS 3Y -1.5bps to 3.432%, 5Y -3.0bps to 3.586%, 7Y - 2.0bps to 3.782%, and 10Y -2.0bps to 3.882%.

Source: AmInvest Research - 15 Feb 2023