Snapshot Summary…

Global FX: The dollar rebounded after three days of losses, pressuring other major currencies

Global Rates: The US bond market started the week on weaker footing after multiple days of rally

MYR Bonds: The MYR bond market seen on bullish trend, alongside higher PDS trading volume

USD/MYR: The ringgit firmed, taking cue from the lower USD last Friday

Macro News

United States : In October 2023, factory orders in the United States experienced a significant decline of 3.6% m/m, marking the largest decrease since April 2020. This decline, worse than anticipated, is indicative of challenges faced by the industrial sector, attributed to elevated interest rates and inflationary pressures. Notably, orders for transportation equipment, particularly nondefense aircraft and parts, saw a substantial drop of 14.7%. Other sectors, including electrical equipment, appliances, and components, machinery, and primary metals, also reported declines.

Australia : Retail sales in Australia declined by 0.2% m/m in October 2032, following a 0.9% increase in the previous month. This drop, the first since June, was attributed to consumers delaying discretionary spending in anticipation of Black Friday sales events. Sales decreased across various categories, including household goods retailing, clothing and footwear, department stores, and other retailing.

Fixed Income

Global bonds: The US bond market started the week on a weaker footing, as investors consolidated their gains after the UST curve rallied last week. The 10Y yield climbed 6 bps at 4.25%, while 2Y yield surged 10 bps to 4.63%. Bund curve closed mixed with longer tenors seen supported while Gilt market were sold-off as yields rose 5 – 8 bps across the curve.

MYR Government Bonds: The MYR bond market seen on bullish trend, aligning with the lower 10Y UST level on Friday that touched 4.20%. The front end to belly part of the MGS curve, particularly 3 – 7 year tenors saw level dropped 1 – 2 bps as players continues buying but mixed with profit taking activities ahead of end of the year. Yesterday, we also saw BNM announce the reopening of MGS 04/28 for MYR5 billion amount with cash market seen traded around 3.618% level.

MYR Corporate Bonds: Gainers were seen outpacing losers as yields mostly fell. Volume traded improved to more than MYR1.0 billion amidst a rally in the sovereign space. Among notable trades were MYR550 million on 12/38 PLUS (GG) done at 4.24%, MYR60 million on 04/36 Infracap Resources (AAA) done at 4.37%, and MYR400 million on 03/18 Sunway (A) done at 5.77%.

Forex

United States: The dollar rebounded after three days of losses, with the DXY index surging to cross above the 103.5 level. Demand for dollars picked up ahead of this week's jobs data releases and coincided with a rise in UST yields. Lower crude oil prices and weak US factory orders were generally set aside as traders moved towards the dollar.

Europe: Just as markets speculate that the ECB will also cut rates by a few times next year (and beginning as early as March 2024), the rebound in the US dollar and UST yields overnight then pressured the euro lower vis-a-vis the dollar. Similarly, against the firmer US dollar, the pound also fell.

Asia-Pacific: China's CNY moved weaker yesterday as markets were cautious ahead of firmer USD and before releases of macroeconomic data this week. Data comprises the latest services gauge, trade numbers and the inflation report due by the weekend. Also incoming for China are a Politburo meeting and yearly Central Economic Work Conference. Meanwhile, as USD showed strength yesterday, the JPY and the AUD also gave up recent gains.

Malaysia: The ringgit posted strong gains yesterday even though the dollar moved higher after its recent losses. The Malaysian currency was aided by last Friday’s less than hawkish comments from Fed's Powell. The ringgit closed at 4.657, 0.4% firmer from last Friday’s close of 4.673.

Other Markets

Gold : Gold also fell whilst the UST yields surged. Gold was about 2.1% weaker.

Crude oil: Crude oil fell with the Brent and WTI slumping >1%. Markets continued to place doubts over the latest OPEC+ plans to add reduction to their output cuts, while there was caution ahead of this week's global macroeconomic data releases.

FBM KLCI: Malaysian equities fell 0.4% yesterday amid the weak movement in other Asian bourses, as sentiment turned cautious while the US dollar posted a rebound and markets await pertinent data out of the US and China this week. Foreign investors bought a net MYR111.5 million Malaysian shares.

US Equities: A rise in UST yields overnight prompted weakness in US stock markets. The S&P 500 fell 0.5% as the Dow weakened by 0.1% and the tech heavy Nasdaq fell by 0.8%.

Source: AmInvest Research - 5 Dec 2023