Macro News

Germany: Germany's trade surplus widened to EUR 20.4 billion in November 2023, driven by a 3.7% increase in exports to EUR 131.2 billion, reaching a five-month high. Exports to the EU rose by 5.4%, and to third countries by 1.8%, with notable increases to China, the UK, and Russia. Meanwhile, imports increased by 1.9% to EUR 110.8 billion, with a 2.8% rise from the EU and a 0.8% increase from non-EU countries, including higher imports from the US, China, and the UK, while imports from Russia declined by 14.0%.

Euro Area: Euro Area retail sales declined by 0.3% m/m in November 2023, following an upwardly revised 0.4% increase in October. This marks the sharpest decline in retail volume since August. Sales of food, beverages, and tobacco decreased by 0.1%, with non-food sales, excluding fuel, dropping by 0.4%, including a 1.2% slump in online retail. Germany experienced a 2.5% contraction in retail volume, offsetting the 0.4% increase in France. On an annual basis, retail sales fell by 1.1%, representing the 14th consecutive period of contraction.

Malaysia: The formation of the Digital Ministry is aimed at spearheading Malaysia's digital transformation efforts, ensuring the country remains competitive and doesn't fall behind, according to Prime Minister. The newly established ministry, a result of a recent Cabinet reshuffle, reflects the urgency to accelerate Malaysia's digital initiatives to keep pace with other nations. The PM emphasized the need for a more aggressive and drastic approach to digital programs, not only for economic and technological advancement but also for enhancing education and healthcare quality.

Fixed Income

Global Bonds: US Treasury started the week on positive note, rallying after multiple sessions of bearish trend. This is after data showed consumer 1-year ahead inflation expectation fell to 3.0% in December 2023 from 3.4% in the prior month, alongside with the drop in oil prices, which may translate into less inflation pressure. Supports also were found from Fed Governor Michelle Bowman’s statement saying that if inflation fall closer to 2.0% goal, it will eventually become appropriate to cut interest rate in preventing the policy to become ‘overly restrictive’. The yield on 10Y UST fell 1 bps to 4.03%. Investors now on the lookout for incoming inflation rate data due this Thursday.

MYR Government Bonds: Local bond market regained its ground with MGS/GII rallied across the 3 – 10Y tenure following the mixed US data last Friday. Meanwhile, the bullish momentum for the local bonds were backed by broader sell-off from the 10Y U.S. Treasury yield (-5 bps) as it was deemed overdone with the momentum last week.

MYR Corporate Bonds: In the PDS space, the trading volume fell to MYR467 million from more than MYR1 billion last Friday. We noticed gainers outpaced losers during the day and among notable trades were MYR45 million on 01/35 PLUS (AAA) done at 4.09%, MYR10 million on 09/40 reNikola Solar done at 4.53%, and MYR20 million on 04/24 UEM Sunrise (AA-) done at 4.11%.

Forex

United States: The dollar started the week on back footing as US shares were lifted, closing Monday at 102.21 or 0.2% d/d lower. While the consumer inflation expectation data may suggest dissipating inflation pressure, investors remained cautious ahead of US inflation data.

Europe: The EUR and GBP firmed against the lower USD. The EUR also was boosted by unexpectedly large growth in Germany’s exports (November 3.7% y/y vs. consensus 0.3% y/y). Eurozone’s economic sentiment improved to 96.4 in December from 94.0, which may also bode well for the EUR currency.

Asia-Pacific: Japanese yen benefitted as well from subdued dollar, rising 0.3% to settle at 144.23. The USD/JPY pair came off from recent one-month high and about to retest the 200-day SMA support line of 143.42. Then yuan, however, could not take advantage from the falling dollar. It fell 0.1% to 7.151. This is also despite the comments from PBoC official saying that the central bank may use many avenues to provide “strong” support for “reasonable credit growth, a signal of a possible cut on required reserve ratio.

Malaysia: The ringgit firmed 0.1% to close at 4.657 after it was traded within the range of 4.643 and 4.657. Domestically, focus will be on Malaysia’s retail sales and industrial production data due this Thursday as well, ahead of overnight US inflation.

Other Markets

Gold: Gold price fell 0.8% to USD2,028/oz as optimism on aggressive rate cuts wanes.

Crude Oil: Crude oil prices dropped with Brent sinking 3.4% and WTI falling 4.1% due to sharp price cuts by top exporter Saudi Arabia on February official selling price of its flagship Arab Light Crude to Asia to the lowest level in 27 months.

FBM KLCI: The FBM KLCI continue its rally, rising 0.5% to 1,496. Foreign investors bought a net of MYR29.8 million Malaysian shares.

US Equities: US equities rose as the Dow Jones climbed 0.6% to 37,683, S&P500 rose 1.4% to 4,764, and Nasdaq gained 2.2% to 14,844.

Source: AmInvest Research - 9 Jan 2024