Snapshot Summary…

Global FX: Dollar held steady on Monday amidst mixed performance in major currencies

Global Rates: Major bond yields shifted higher as rate cut bets were pared by Fed officials’ speeches

MYR Bonds: The MGS market was seen mixed, in tandem with muted traded volume in the PDS market

USD/MYR: Ringgit weakened, erasing gains made last Friday

Macro News

China : Foreign direct investment decreased by 9.4% y/y to CNY987.01 billion in the first ten months of 2023. The service sector saw a 15.9% decline in FDI to CNY672.10 billion, while the manufacturing sector experienced a 1.9% increase to CNY283.44 billion. Notably, high-tech manufacturing investment rose by 9.5%, with significant growth observed in the medical equipment and electronic communication equipment manufacturing industries.

Singapore: Singapore's non-oil domestic exports (NODX) increased by 1.0% y/y in November 2023, below expectations but rebounding from the previous month's fall. This growth, the first since September 2022, was driven by a 5.2% rise in nonelectronic products, particularly in pharmaceuticals, non-monetary gold, and miscellaneous manufactured articles. However, electronic products declined by 12.7%, with notable decreases in personal PCs, ICs and diodes, and transistors.

Malaysia: Prime Minister highlighted the need for broad support, including financing, incentives, technology, and infrastructure, to address challenges and opportunities in clean energy and ensure a "just transition." Speaking at the Asia Zero Emission Community (Azec) Leaders Meeting in Tokyo, he emphasized Malaysia's commitment to accelerating its energy transition journey.

Fixed Income

Global bonds: US Treasuries started the week on weaker footing as traders pared sooner rate cut expectations after speeches from Fed officials, pushing back against early rate cut bets by the market. The 2Y yield remained steady at 4.44% but the 10Y yield increased 2 bps to end Monday at 3.93%. In tandem, Gilt and Bund yields shifted higher by 1 – 3 bps for the former and by 4 – 6 bps for the latter.

MYR Government Bonds: The ringgit sovereign bond market saw a rather mixed performance, reacting to the mixed movements on UST curve last Friday. The 10Y MGS yield rose 1 bps to settle at 3.75%.

MYR Corporate Bonds: Traded volume in the PDS market was muted with a mere MYR366 million from MYR876 million last Friday. Among notable trades were MYR10 million on 09/28 Toyota Capital (AAA) done at 4.04%, MYR50 million on 06/24 Pengurusan Air SPV (AAA) done at 3.74%, and MYR30 million on 01/27 (AA3) done at 4.05%.

Forex

United States: The DXY index started the week on muted note, closing Monday at 102.56, compared to last Friday’s end-of-the-day level at 102.55. This was despite reports quoting Chicago Fed Austan Goolsbee saying the central banks has not precommitted to accelerated cuts in interest rates and that markets' view is running ahead of Fed's signalling.

Europe: The EUR was firmer as traders were cautious on Monday to let the EUR to weaken as markets read reports from Reuters that ECB policymakers are arguing against interest rate cuts by early 2024. Meanwhile, the GBP fell as sentiment was guarded before release of the latest UK CPI data due for Wednesday. BoE Deputy Governor Ben Broadbent was quoted saying it is difficult to determine if UK wages are cooling down.

Asia-Pacific: CNY weakened even as the dollar was weak and PBoC setting the CNY fixing at the strongest in six months at 7.0933. Pressuring the CNY was sustained concerns over China’s growth. Meanwhile, PBoC continued to add onshore liquidity, via injection of CNY244 billion through reverse repos in open market operations. Aside, JPY was weak in cautious trading as the BoJ kicked off its 2-day policy meeting.

Malaysia: The ringgit was pressured yesterday, coinciding with prior day's UST yields moving mixed after last week's large decline, as well as pressured by risk aversion due to worries over China's growth prospects. USD/MYR rose 0.5% to close at 4.695, and reversing further from last week's lows near 4.659.

Other Markets

Gold : As the dollar continued to weaken, gold was traded higher as its price rose 0.4% to USD2,027 per oz.

Crude oil: Crude oil performed better than gold. Brent rose 1.8% and the WTI rose by 1.5%. Oil was boosted by supply concerns as news indicated militants had stepped up attacks on ships in the Red Sea.

FBM KLCI: The FBM KLCI gained 0.2% on Monday to close at 1,462. Interest in banking and commodity-related stocks buoyed the index.

US Equities: US equities added on the recent gains on the back of Fed rate cut expectation. Though the Dow closed little changed, the Nasdaq rose 0.6% while the S&P500 strengthened by 0.5%.

Source: AmInvest Research - 19 Dec 2023