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Snapshot Summary…

Global FX: Dollar demand was softer following weaker economic data released in the US

Global Rates: UST curve rallied, in tandem with Bund and Gilt curve, on safe-haven bids

MYR Bonds: A quiet day in the local bond space after the recent buying flows

USD/MYR: MYR marginally weakened, reflecting the rebound of USD from the previous session

Macro News

United States: Data releases were weaker. Initial claims for the week ended 11 November increased by 13K to 231K while continuing jobless claims for the week ended 4 November increased by 32K to 1.87 million. US industrial production declined 0.6% m/m in October following a downward revised 0.1% increase (from 0.3%) in September. The NAHB Housing Market Index fell to 34 in November from 40 in October.

Japan: Trade deficit for Japan narrowed to JPY662.5 billion for the month of October 2023, less than market estimates of JPY735.7 billion deficit and swinging from JPY72.1 billion trade surplus in the previous month. Exports grew 1.6% y/y while imports dropped 12.5% y/y.

Australia: Australia’s seasonally adjusted unemployment rate edged higher to 3.7% in October 2023, resuming its steady rise from the record low of 3.4% back in 2022. The number of unemployed persons increased to 547.8K while employment surged by 55K to 14.17 million compared with market forecast of 20K gains.

Fixed Income

Global bonds: UST curve rallied overnight after economic data released showed weaknesses in the US economy. The weekly initial jobless claims rose higher than expected, while industrial production for October 2023 contracted 0.6% m/m, larger than market forecast of 0.3% contractions. Fed speeches were also mixed as Fed Governor Lisa Cook remarked that soft landing is possible but not guaranteed while Cleveland Fed President Loretta Mester said that monetary easing was not “part of the conversation tight now”. On another note, traders are pricing in at least 97% probability that the US Fed will stay put during the upcoming 13th December 2023 meeting, the last meeting of 2023. In the meantime, Bund and Gilt curve rallied as well with yields falling 4 – 8 bps overall.

MYR Government Bonds: A quiet day in the local bond space as the recent buying flows came to a halt, influenced by the sudden shift upwards on US Treasuries yields from the previous session following healthy retail sales figures, exceeding expectations. Ringgit bonds traded mixed, with yields inching slightly higher by 2 bps on the 7-20Y part of the curve.

MYR Corporate Bonds: Trading volume in the PDS market improved further to MYR878 million from MYR770 million the day before. However, overall trading sentiment was mixed. Among notable trades were MYR60 million on 07/25 Pac Lease (AA) as it made its debut and was done at 4.14%. Other than that, we also noticed that MYR170 million trading volume on GG 03/32 Danainfra Nasional done at 3.99%, and MYR80 million on 01/36 Sarawak Petchem (AAA) done at 4.43%.

Forex

United States: There was relatively soft close for the dollar which fell a mild 0.04% lower, with the DXY still hovering near its lowest for the week at 104.4. The dollar was pressured by the release of higher than expected weekly initial jobless claims which rose by 31K to 231K when expected was for about 220K.

Europe: With the dollar meandering near the 104 level while there was a lack of fresh drivers, the euro moved also in a listless manner, which strengthened 0.1% for the day. GBP was slightly lower, ending little changed near the 1.241 level.

Asia-Pacific: China’s yuan weakened on Thursday, pressured by persistent weakness in the country’s real estate sector. Yesterday saw data from the National Bureau of Statistics which showed prices fell in 56 out of 70 cities. This is up by two from September. Prices rose in 11 cities and remained flat in three. CNY rose 0.1% to close at 7.243. Prior to the market opening, the PBoC set the midpoint fixing at 7.1724, the firmest level since 27 September. Meanwhile, JPY remained pressured from prior day’s downward surprise in Japan’s 3Q2023 GDP. AUD weakened against a firmer USD yesterday, as well as pressured after Australia’s unemployment rate rose to 3.7% in October from 3.6% in September.

Malaysia: Amid a US dollar rebound from over two-month lows, the ringgit opened weaker yesterday but found strength by the afternoon session. MYR reached above 4.717 before it found buyers at that level, winding down to close the day near 4.688.

Other Markets

Gold : Gold prices increased, up 1.1%, as the dollar stayed pressured while UST yields fell after the release of weak US economic data.

Crude oil: Crude oil price tumbled amid worries over demand, including economic growth risks in China, and worries over oversupply after this week EIA had reported the rise in inventories.

FBM KLCI: The FBM KLCI fell slightly due to profit-taking activity, down 0.1% yesterday, after the index had rallied by 1.0% and reached an eight-month high the day before.

US Equities: US stocks closed mixed on the back of weak weekly employment data and concerns over US corporate earnings. The Dow index fell 0.1% while the S&P500 edged up 0.1%.

Source: AmInvest Research - 17 Nov 2023