Snapshot Summary…

Global FX: Dollar demand improved further, pushing DXY to slightly above 104-level

Global Rates: UST and Bund curve rallied on weak economic data and ECB speech

MYR Bonds: The MYR bond market posted another day of bullish trend amidst higher trading volume

USD/MYR: The ringgit weakened, taking cue from weaker CNY

Macro News

United Kingdom : The Composite PMI in the United Kingdom rose to 50.7 points in November 2023 from 48.7 points in October. This marks an improvement, with the average Composite PMI in the UK standing at 53.58 points from 2013 to 2023. The highest recorded value was 62.9 points in May 2021, while the lowest was 13.8 points in April 2020.

Euro Area : The median consumer expectations for Euro Area inflation over the next 12 months remained steady at 4.0% as of October 2023, matching the highest level since April. Data from the ECB Consumer Expectations Survey also showed that expectations for inflation three years ahead held steady at 2.5%, with unchanged uncertainty about inflation expectations over the next 12 months.

China: The Caixin China General Composite PMI increased to 51.6 in November 2023 from the previous month's 50.0. This marked the 11th consecutive month of growth in private sector activity, with the steepest pace since August. The expansion was driven by unexpected growth in factory activity following a decline in October, and the service sector experienced its highest growth in three months.

Australia: During its final meeting of the year, the Reserve Bank of Australia (RBA) maintained its cash rate at 4.35%, aligning with market expectations. This decision allows the RBA to evaluate the impact of previous rate hikes. The central bank remains cautious about inflation, noting that it is increasingly driven by domestic demand rather than external supply shocks.

Fixed Income

Global bonds: UST curve rallied further on top of US morning session’s gains following October JOLTS job openings showed lower reading at 8.73 million, compared to previous reading of 9.35 million and market consensus of 9.30 million. Yields on 2Y and 10Y benchmark tenors dropped 6 bps and 9 bps, each. This also following the gains in Bunds after ECB Schnabel said that more hikes are unlikely due to the “remarkable” fall in inflation.

MYR Government Bonds: The MGS/GII curve posted another day of rally with 10Y MGS down 3 bps to 3.78%, lower than that of the 7Y at 3.79%. Towards the end of session, Fitch affirmed Malaysia's sovereign rating at 'BBB+' with Stable outlook. The rating agency cited Malaysia's ratings is balanced by a diversified economy with strong medium-term growth prospects against high public debt, but also mentioned a low revenue base relative to operating expenditure, as well as political risks, and reform implementation. WI quotes for the MGS 04/28 reopening was tight at 3.64/3.62%.

MYR Corporate Bonds: Gainers continue to overwhelm the market, tracking the rally in the sovereign space. The volume traded was lower albeit remained heavy at MYR768 million. Among notable trades were MYR40 million on 06/24 Pengurusan Air SPV done at 3.31%, a debut from 04/28 YTL Corporation with MYR140 million volume done at 4.27% vs. coupon at 4.65% (AA1), and MYR20 million on 09/25 Tanjung Bin Energy done at 5.01%.

Forex

United States: The dollar rose yesterday but rebounding from early losses from a low of 103.5 to end overnight at 104.01. The dollar was earlier pressured from weakerthan-expected JOLTS jobs openings while the previous month's number was revised down to 9.4 million from 9.6 million. However, the dollar was supported by the ISM Services Index at 52.7 in November vs. 52.3 consensus expectations, on top of an overall rebound after the DXY had opened near 103.0 this week.

Europe: The EUR continued to slide, seen overnight at a low of 1.078 but found support near that level. Sustained view of a dovish ECB maintained the pressure on the EUR though economic data overnight were supportive, including eurozone PPI up 0.2% m/m as expected and down 9.4% y/y vs -9.5% consensus while eurozone services PMI rose to 48.7 in November from 47.8 October. Germany's November services PMI surged to 49.6 from 48.2. The UK services PMI rose to over the 50 level to 50.9 in November from 49.5 and beat expectation of 50.5.

Asia-Pacific: Moody's cut its outlook on China's sovereign credit ratings to negative. However, China's major state-owned banks were heard buying the CNY on Tuesday to prevent the currency from too much weakening. Moody's cut its outlook on China's from stable, citing expectations economic growth risks and risks of a large correction in the China’s property sector. The CNY depreciated 0.1% but found some support from the November Caixin services PMI higher at 51.5 from 50.4 previously. The RBA left its cash rate at 4.35% as widely expected, pressuring the AUD/USD pair to fall 1.0%.

Malaysia: MYR fell vs. the USD to follow the weaker movement in the Chinese yuan after Moody's cut its outlook on China's ratings to negative. However, MYR rose against most of the crosses, aided by the firmer onshore bond market yesterday.

Other Markets

Gold : Gold prices fell by 0.5% as the USD strengthened overnight.

Crude oil: Crude oil prices fell to a near five-months low after USD posted stronger performance as the market doubts over OPEC+ supply cut plans, coupled with demand concerns.

FBM KLCI: Malaysia's equities closed lower but pared early losses. The FBM KLCI fell 0.1% to 1,449.46.

US Equities: Mixed movement in US stocks overnight. The Dow index fell 0.1% and the S&P500 fell 0.2% but the tech-heavy Nasdaq rose by a steady 0.3%.

Source: AmInvest Research - 6 Dec 2023