Global FX: Mixed performance were seen among major currencies with USD and AUD rallying but EUR and GBP fell
Global Rates: UST Market Closed Mixed Overnight, But Gilts and Bunds Were Bullish
MYR Bonds: The MGS market was bearish ahead of the 20Y GII reopening tender as well as pressured by prior day’s continued UST weakness
USD/MYR: Malaysian Ringgit Strengthened Amidst Mixed Regional Currencies
United States: Existing-home sales in the US fell by 2.2% compared to the previous month, reaching a seasonally adjusted annualised rate of 4.07 million units in July 2023. This figure marked the lowest level since January and was below market expectations of 4.15 million units. The decline was attributed to higher mortgage rates and limited inventory.
Eurozone: In June 2023, the Eurozone achieved a significant current account surplus of EUR 36.8 billion, a turnaround from the previous year's deficit of EUR 4.4 billion. This surplus, the largest since September 2021, was mainly attributed to the goods account shifting to a surplus of EUR 42.7 billion from an EUR 8.0 billion deficit.
Global bonds: US treasuries closed mixed overnight. Long tenors closed modestly firmer while short tenors weakened with the 2Y up another 5 bps to end above the 5.00% mark. US data releases were light but existing home sales fell 2.2% m/m in July to a seasonally adjusted annual rate of 4.07 million. It was down 16.6% on a yearly basis. Meanwhile, encouraged by the mixed UST, both Gilts and Bunds ended firm while yields were tracking down from monthly highs. At the same time, fears over China’s credit problems remained and aided global government bonds. A unit of Chinese real estate group Sino Ocean said it may default on the principal amount on one of its bonds.
MYR Government Bonds: The MGS market was bearish ahead of the 20Y GII reopening tender as well as pressured by the prior day’s continued UST weakness. The WI level was given to a high of 4.28% before it was taken back lower to 4.27% and tender results came out at average 4.285% yield with decent BTC at 1.932x. However, bonds turned bullish in the afternoon session with yields down by 1 to 2 bps particularly on the 5 - 10-year part of the curve. We think there is also short-term foreign interest on the attractive USDMYR level at 4.6480.
MYR Corporate Bonds: Ringgit corporate bonds closed relatively firm yesterday with investors picking up select names on heavy volume traded. Notable trades include AA1 Maybank IMTN 10/30 at 4.01% in MYR160 million volume and AAA Sarawak Energy was done at 4.05% on MYR50 million volume.
US: The dollar index closed the day at 103.56 or 0.3% higher compared to the previous day as investors wait for guidance from Jackson Hole Symposium to gauge clearer path on interest rate outlook. The dollar also found support from hawkish tone by Richmond Fed Thomas Barkin. He stated that the US Fed need to consider that the economy may begin to reaccelerate rather than slowing down, based on recent strong data; higher than expected retail sales and rising consumer confidence. If inflation remains high and “demand” is seen not going down, this will make the case for further tightening of monetary policy. At the same time, he did not provide any clear guidance on what the central bank would do during the September meeting.
Europe: Both the EUR and GBP fell by 0.5% and 0.2% respectively against the firmer dollar. On the data front, the Confederate of British Industry (CBI) total order book balance fell to -15 in August 2023 from -9 in the prior month (consensus: -13), underpinning the gloomy economic conditions among manufacturers in the UK. Meanwhile, Eurozone recorded a current account surplus of EUR36.8 billion in June 2023, swinging from the EUR12.5 billion deficit in the previous month.
Asia-Pacific: The Japanese yen firmed 0.2% to 145.89 as market players remained cautious if there will be any intervention by authorities to support the yen at current level. The Aussie dollar gained 0.1%, consolidated after the recent bearish run which pushed the currency towards its lowest level since November last year. On the other hand, the CNY weakened 0.1% to 7.294, pressured by the worries about the economic growth. This is despite Beijing’s latest move in supporting yuan through swaps by state-owned banks in offshore markets to raise the cost of shorting the currency and reduce yuan in the market. The KRW posted 0.5% gains against the dollar as consumer confidence in South Korea beaten market expectations at 103.1 (consensus: 101.9), benefitted from the Bank of Korea’s move holding its interest rate unchanged for the fourth consecutive times.
MYR: The ringgit appreciated slightly by 0.02% and traded within the tight range of 4.644 and 4.653 as market players remained cautious ahead of key event Jackson Hole symposium and local inflation data on Friday.
Gold: With investors remained cautious ahead of key events, gold prices gained slightly by 0.1% to settle at USD1,897/oz.
Crude Oil: Concerns on China’s demand prompted by recent economic malaise have weighed oil prices. Both Brent and WTI dropped by 0.5% each.
FBM KLCI: Malaysia's FBM KLCI rose slightly by 0.1%. Foreign investors were net sellers of RM62.9 million Malaysian shares.
US Equities: The US stock market closed mixed with the Dow Jones falling 0.5% and the S&P500 shedding 0.3%. But the Nasdaq rose 0.1%.
Source: AmInvest Research - 23 Aug 2023