Macro Highlights 

Unexpectedly, the US economy posted healthier-thanexpected growth at 4.9% q/q vs. consensus of 4.5%. Domestically, the government tabled its 12th Malaysia Plan Mid-Term Review in which annual GDP growth rate target has been revised to 5.0% - 6.0%.

Global Bond 

UST yields drifted higher on expectations of tight monetary policy to sustain well into next year. Bund market saw rally sentiment after ECB did not change its interest rates.

Malaysia Bond Market 

Malaysian Government Securities (MGS) yields and MYR IRS rate rose in October, taking cue from upward shifts in US Treasury curve after the Fed hinted for longer period of high US interest rates.

Global FX Market 

The strength in USD on ‘higher-for-longer’ rate narrative and recent escalation of geopolitical tension pushed emerging & riskier currencies lower.

Local Issuances, Foreign Holdings & Secondary Market Volume 

ESG Issuance – Total ESG corporate bonds issued in January-October 2023 comes up to MYR16.4 billion from MYR13.5 billion the month before.

MGS/GII Issuance – By the end of October 2023, gross issuance of MGS and GII amounted to MYR160 billion, excluding switch auction.

Foreign Holdings – September 2023 data showed that the total foreign holdings in MGS fell by 0.3% m/m to RM201.3 billion while in GII papers increased 0.9% m/m to RM50.8 billion.

Secondary Volume – The weak sentiment in the domestic bond market was exacerbated by higher trading volume: secondary trading in MGS rose 19.9% m/m while in GII it also rose by 19.9%.

MYR Bonds: Rates & Credit Perspectives 

The sentiment in the MGS market in October was mainly a continuation of the trend in September, in that yields remained elevated. However, we continue to think the cause was slanted towards the cautious sentiment brought on by the surge in UST yields.

Source: AmInvest Research - 3 Nov 2023