Snapshot Summary…

Global FX: Dollar extended losses after Fed officials’ speech

Global Rates: Major bond markets closed firmer with UST yields closed lower 3-15 bps

MYR Bonds: Local bond market saw firmer bid prices across the tenor though trading activities remained thin

USD/MYR: The ringgit firmed again near 4.67-level

Macro News

United States : The S&P CoreLogic Case-Shiller 20-city home price index in the US rose 3.9% y/y in September 2023, marking the largest increase since December 2022. The gain, driven by a relative shortage of inventory for sale, exceeded forecasts. Detroit led the cities with the highest year-over-year gain, followed by San Diego and New York. Meanwhile, Las Vegas, Phoenix, and Portland recorded the biggest decreases in home prices.

Australia : Retail sales in Australia unexpectedly fell by 0.2% m/m in October 2023, the first decline since June, as consumers paused discretionary spending and awaited Black Friday sales. Most categories, including household goods retailing, clothing, and department stores, experienced lower sales, while food retailing eased. Sales declined in several states, including New South Wales and Victoria, but rose in Queensland and Western Australia.

Malaysia : Producer prices in Malaysia declined by 0.3% y/y in October 2023, following a 0.2% rise in the previous month. Manufacturing and electricity & gas supply prices decreased, while inflation decelerated for mining & quarrying. Conversely, costs increased for agriculture, forestry & fishing, and water supply. On a monthly basis, producer prices fell by 0.3% in October.

Fixed Income

Global bonds: UST curve extended its gains after speeches by US Fed officials bolster up the case for the central bank is done hiking interest rates. Fed Governor Christopher Waller said he is increasingly confident that the current policy is “wellpositioned” to tame inflation back to the 2.0% target. The UST 2Y yield sank 15 bps to finish the day at 4.73% while the 10Y yield fell 7 bps to 4.32%. In parallel, yields on Bund and Gilts also shifted lower by 1 – 8 bps overall.

MYR Government Bonds: Local bond market saw firmer bid prices across the tenor, taking cue from the lower global yields from the previous session but trading activities remain lukewarm in the absence of fresh flows. All eyes will be on the reception of the upcoming 7-year GII auction with the WI last traded at 3.94%.

MYR Corporate Bonds: PDS market saw gainers outpacing losers, but volume traded was higher at MYR634 million yesterday. Among notable trades were MYR125 million on 10/37 Danainfra Nasional done at 4.15%, MYR30 million on 01/33 Projek Lebuhraya Usahasama (AAA) done at 4.18%, and MYR70 million on 06/24 CIMB Group done at 3.81% (AA1).

Forex

United States: The dollar fell further to below 103-level as the bets for the US Fed is already at the end of its rate hike cycle bolstered by the Fed Governor Christopher Waller speech. Technical indicator on DXY index shows that the index had already breached 200-day moving average level to the downside on Monday, suggesting potential downtrend for the index. Although, an upside surprise in 2nd estimate GDP growth rate and core PCE Price Index later this week could overturn the technical dynamic.

Europe: Against lower USD, the Euro rose 0.4% to its highest level since August this year. German’s consumer confidence improved to -27.8 heading into December 2023 from -28.3 in the prior month (cons.: -27.9). The indicator is now near its worse level compared to 2020 Covid-driven recession level as the ECB embarked on its tightening policy journey. The GBP also rose gained advantage amidst weaker dollar demand as it rose 0.5% to settle at 1.269. The BoE Deputy Governor Dave Ramsden said that the monetary policy likely needs to be restrictive for an extended period of time for “sufficiently long” time to get inflation back to the target.

Asia-Pacific: Yesterday’s dollar weakness during the Asian session benefited Asian currencies including the yen which was hovering just above 148 amidst lack of domestic data drive. The JPY strengthened 0.8% to close at 147.48. The offshore yuan was firm near the 7.135-level, and near its strongest levels in four months as the PBoC stressed its aim to keep the yuan stable in its quarterly policy implementation report. Traders still await China’s manufacturing activity data due this week for further guidance. AUD rose against the USD, despite release of weak Australian retail sales data.

Malaysia: The ringgit posted gains over the weaker dollar yesterday when the USD/MYR fell to touch 4.670. However, we expect cautious sentiment in the ringgit ahead of US CPE inflation data release.

Other Markets

Gold : Gold prices extended its gains above USD2,000/oz level as investors continue to bet on Fed pausing its rate hike path.

Crude oil: Oil prices rose with both Brent and WTI surging 2.1% ahead of OPEC+ meeting where there is possibility for those oil producers will deepen supply cuts.

FBM KLCI: The FBM KLCI closed marginally lower by 0.01% to 1,448. Foreign investors bought a net of MYR114.3 million Malaysian shares on Tuesday.

US Equities: As concerns about the Fed’s hawkishness fade, US stock markets closed higher with Dow Jones rising by 0.2%, S&P500 by 0.1% and Nasdaq by 0.3%.

Source: AmInvest Research - 29 Nov 2023