Snapshot Summary…

Global FX: US and Japanese markets were closed due to Thanksgiving holiday, benefitting other major currencies

Global Rates: Bund and Gilt yields traded higher following impressive PMI data

MYR Bonds: MGS market closed in a narrow range yesterday, with traded volume remaining thin

USD/MYR: Ringgit weakened again amidst mixed regional currencies performance

Macro News

United Kingdom: In November, the S&P Global/CIPS United Kingdom Manufacturing PMI rose to 46.7, up from 44.8 in the previous month and surpassing market expectations. Despite this improvement, output witnessed its slowest contraction in five months, but inflows of new work and employment levels continued to decline due to unfavourable domestic economic conditions and sluggish demand.

Euro Area: In November, the HCOB Eurozone Manufacturing PMI rose to 43.8, marking a six-month high and surpassing expectations. Despite this improvement, manufacturing production declined for the eighth consecutive month, albeit at a less severe pace. New orders experienced a milder fall, leading to significant job cuts in the sector. Purchasing activity was rapidly reduced, and inventories of both purchases and finished goods were lowered.

Malaysia: A memorandum of understanding (MOU) between Malaysia and Singapore regarding the Johor-Singapore Special Economic Zone (JSSEZ) is set to be signed on January 11, 2024. Johor Menteri Besar highlighted that JSSEZ, and the Special Finance Zone in Forest City have played a pivotal role in the state's development, focusing on sectors that drive economic growth.

Fixed Income

Global bonds: Yields for Bunds and Gilts ended higher yesterday; the 10Y Bund rose 6 bps to close at 2.62% while Gilts rose 10 bps to 4.26%. Movers for bonds yesterday were German November PMI Manufacturing number rising to 42.3 from 40.8 and consensus expectation of 41.2, while the Services PMI rose to 48.7 from 48.2 previously and 48.5 consensus. This comes ahead of Germany's 3Q2023 GDP release today where consensus is for -0.8% y/y vs -0.8% y/y advance number. Aside, Germany's government coalition has suspended the 'debt brake' for 2023, placing potential for more debt issuance. Meanwhile, ECB minutes show policymakers agreeing to keep the option open for another rate hike, recognising the need to 'avoid an unwarranted loosening of financial conditions'. In the UK, alongside the better manufacturing PMI performance, the Services PMI jumped to 50.5 from 49.5 previously and 49.5 consensus.

MYR Government Bonds: The MGS market closed within a narrow range yesterday, with traded volume remaining thin. There was a lack of fresh bets ahead of the long US weekend. However, the local market continues to see players looking to buy longdated bonds for yield pickup.

MYR Corporate Bonds: Similar to the previous day, slightly firmer trading of corporate bonds was also noted yesterday, amid the lack of momentum in the government bond market. However, traded volume was lower at MYR457 million compared with MYR800 million the day before. Notable trades include shorter dated 01/24 PLUS (AAA) done at 3.69% which shed 3 bps and 01/27 PLUS (AAA) at 3.96% which fell a larger 18 bps.

Forex

United States: The DXY index was unchanged at 103.92 as the US market went into holiday mode due to Thanksgiving Day. The focus now will be on S&P Global PMI due to be released later tonight.

Europe: Both the EUR and GBP took advantage of the market close in the US as both posted 0.2% and 0.3% gains, respectively. On the data front, the November’s HCOB Composite PMI for Eurozone surprised to the upside although marking sixth straight months of contraction. UK’s Composite PMI also replicated the same trend, chalking up improvement at 50.1, the first growth in three months.

Asia-Pacific: The JPY was also unchanged 149.56 due to Thanksgiving Holiday. In the meantime, the CNY firmed 0.2% to 7.148 as the PBoC extends currency, setting the yuan fixing at the strongest level since 19th June at 7.1212. The average Bloomberg survey estimate was 7.1508. The AUD rose 0.2% to close at 0.656. The weaker economic data reading may have capped the currency gains as Judo Bank Composite PMI deteriorated further to 46.4 from 47.6 in the earlier month.

Malaysia: USD/MYR pair rose 0.1% to close at 4.680 and traded within the range 4.679 – 4.696. Focus today will be on Malaysia’s October inflation rate where the market is expecting the price pressure to remain stable at 1.9% y/y, the same as prior month’s reading.

Other Markets

Gold : Gold prices rose marginally 0.1% to USD1,992/oz amidst the holiday in the US.

Crude oil: WTI price was held at USD76 per barrel while Brent price fell 0.7% to USD81 per barrel as markets were concerned on the postponed OPEC+ meeting, prompting expectations that the group of producers may not cut supplies after all.

FBM KLCI: The local bourse’s KLCI shed 0.2% to 1,453.

US Equities: Wall Street was closed for the Thanksgiving holiday.

Source: AmInvest Research - 24 Nov 2023