Macro News

United States: The United States unemployment rate remained at 3.7% in December 2023, unchanged from the previous month and slightly below the market consensus of 3.8%. This stability was influenced by a slowdown in new entries into the labor force. The activity rate declined to 62.5% in December from November's 62.8%.

United Kingdom: In December 2023, the Halifax House Price Index in the UK increased by 1.7% y/y, breaking a seven-month streak of continuous declines driven by a scarcity of available properties amid weak buyer demand. On a month-to-month basis, house prices rose by 1.1%, marking the third consecutive month of gains. Euro Area: The inflation rate in the

Euro Area in December 2023 increased to 2.9% y/y, rising from the previous month's over two-year low of 2.4%. This uptick was primarily driven by energy-related base effects, as energy prices saw a decline of 6.7%, less severe than the 11.5% decrease in November. Services inflation remained steady at 4.0%, while the pace of price rises moderated for both food, alcohol & tobacco (6.1% vs 6.9%) and non-energy industrial goods (2.5% vs 2.9%). The core inflation rate, excluding volatile food and energy prices, cooled to 3.4%, marking its lowest point since March 2022.

Fixed Income

Global bonds: The UST bond yields trended higher on Friday as longer-term rates rose by more than 4 bps while the 2Y UST yield held steady at 4.38%. This is taking cue from the stronger than expected non-farm payrolls at 216K jobs in December 2023, up from 173K in the prior month. In addition, hourly earnings grew faster by 4.1% y/y in the same month (3.9% y/y in November), underpinning still hot labour market. But the yield curve was pressured as well by the soft patch indications through weaker reading of Services PMI by ISM. Bund yield curve at the same shifted higher by 2 – 4 bps while Gilt yield curve rose 3 – 7 bps.

MYR Government Bonds: Ringgit bonds were not spared and mirrored the global bond markets’ weakness as optimism momentum which was seen ahead of the new year seemed to have died down. MGS/GII yield across the curve was seen higher by 3 – 12 bps last week with the 10Y moving the most. On the primary space, we had the reopening of MGII 08/33 last week which saw good demand with BTC touching 2.44x while the tender yield resulted at average 3.908%. Post tender saw the yield traded at 3.906% level. The next upcoming sovereign tender will be the reopening of MGS 03/53 and the issue amount anticipate around MYR4.5 billion – MYR5 billion. MYR Corporate Bonds: In the PDS space, the trading volume surged to MYR1.31 billion with gainers outpacing losers, bucking the weak trend in the sovereign space. Among notable trades were MYR300 million on 10/26 Danainfra Nasional done at 3.59%, MYR10 million on 07/37 Sarawak PetChem (AAA) done at 4.31%, and MYR50 million on 08/25 Press Metal (AA2) done at 3.90%.

Forex

United States: The dollar ended Friday on flat note at 102.41 after hitting 103.10 following the strong NFP data. Towards the end of the session, the dollar index was pressured by the lower reading of Services PMI at 50.6 from 52.7 in the prior month. Europe: The EUR held steady and closed Friday at 1.094, as the preliminary inflation rate for the

Euro Area grew faster at but falling short from market forecast of 3.0%, putting less pressure for the ECB to remain hawkish. In the meantime, the GBP rose 0.3% to 1.272.

Asia-Pacific: The JPY closed at 144.63 after it touched an intraday high of 145.97 as the market remain in doubt for the BoJ to quickly lift its negative interest rate policy following recent natural disasters. The CNY however, firmed 0.2% to 7.147 as is found support from dollar sales by state owned banks, according to Bloomberg news flow. The PBoC also set the midpoint yuan fixing at 7.1029, firmer than Bloomberg’s survey of 7.1589. Market players continue to bet on further monetary easing in China to support the fragile economy.

Malaysia: The ringgit traded weaker, depreciating 0.4% to settle at its intraday weakest of 4.655. Continuous reassessment of US interest rate outlook and slight risk averse mode in the market could not provide support for the ringgit after it closed at sub 4.60-level end 2023.

Other Markets

Gold: Gold price rose slightly by 0.1% to USD2,045/oz as the dollar went down.

Crude oil: Crude oil prices surged with Brent climbing 1.5% and WTI rising 2.2% due to the escalating Middle East tension.

FBM KLCI: The FBM KLCI climbed 0.8% to 1,488. Foreign investors bought Malaysian shares of a net MYR128.4 million.

US Equities: US equities were closed in green as the Dow Jones rose 0.1%, the S&P500 gained 0.2% while the tech heavyweight Nasdaq rose 0.1%.

Source: AmInvest Research - 8 Jan 2024