Macro News

United States : In December 2023, the NFIB Small Business Optimism Index in the US rose to 91.9, the highest in five months, exceeding November's 90.6 and beating expectations of 90.7. The increase is attributed to more positive expectations for future business conditions. Inflation became the top concern for small business owners, with 23% identifying it as the most important problem. The index also reflected a rise in the percentage of owners planning to raise compensation and an unchanged net percent of owners raising average selling prices. Additionally, the net percent of owners expecting higher real sales increased to -4%, the highest since January 2022.

Euro Area : The Euro Area's seasonally adjusted jobless rate reached 6.4% in November 2023, matching June's historic low and slightly exceeding the expected 6.5%. The number of unemployed individuals decreased by 99 thousand to 10.970 million. Youth unemployment (under 25) also declined to 14.5%. Spain had the highest jobless rate at 11.9%, while Germany and the Netherlands reported the lowest rates at 3.1% and 3.5%, respectively.

United Kingdom: In December 2023, UK retail sales increased by 1.9% compared to the previous year, showing a slowdown from the 2.6% gain in November. This modest growth during the Christmas holidays was attributed to challenges such as high inflation and elevated borrowing costs, impacting consumer confidence and spending.

Fixed Income

Global bonds: The UST curve rallied again for the second straight days as yields closed Tuesday by falling by 1 – 2 bps across tenures, erasing early session sell-off. Investors wait for inflation data on Thursday. The rally was after Gilt and Bund curve underperformed in respective market, despite economic data released in Germany and in the UK suggest further softening in the economy. The BRC retail sales monitor grew slower at 1.9% during holiday period December 2023 (vs. 2.6% y/y in November), and Germany’s industrial production declined 0.7% m/m during November, worse than the 0.3% m/m decline in the prior month (consensus: +0.2% m/m).

MYR Government Bonds: Local bond market continued its rally over last week selling spree with MGS/GII rallied across the 3 – 15Y tenure. The positive sentiment was somewhat consistent with overall regional bond’s performance following Thai Prime Minister opining that the central bank should consider cutting interest rate due to low inflation environment and comment from Fed Governor Michelle that interest rate hikes are likely over.

MYR Corporate Bonds: In the PDS space, gainers outpaced losers and among notable trades were MYR300 million on PTPTN (GG) 03/24 done at 3.35%, MYR60 million on TNB Power Generation (AAA) 03/43 done at 4.27%, and MYR50 million on 12/32 CIMB Group (12/32) done at 4.05%.

Forex

United States: The DXY index gained 0.4% to 102.57 as investors became cautious ahead of key US inflation data and as the geopolitical tension in the Middle-East continues.

Europe: Against the stronger USD, the EUR fell 0.2% to finish Tuesday at 1.093. Despite the Eurozone’s seasonally adjusted unemployment rate unexpectedly went lower, the EUR could not hold itself against the dollar. The GBP also closed lower by 0.3% to settle at 1.271.

Asia-Pacific: The JPY declined 0.2% after data showed household spending contracted by 1.0% m/m in November compared to 0.2% growth expected and a smaller 0.1% decline in the previous month. In the meantime, the CNY weakened 0.2% to 7.169, approaching one-month low as the expectations for PBoC rate cut persisted. The PBoC set yuan mid-point fixing at 7.101 vs. the Bloomberg survey of 7.149.

Malaysia: The ringgit strengthened 0.2% to 4.643, after traded within the range of 4.640 and 4.651. Considering that the USD traded firmer overnight, the USD/MYR pair could grind higher today as a reaction.

Other Markets

Gold : Gold price rose 0.1% to USD2,030/oz as the UST yields fell.

Crude oil: Crude oil prices rebounded and recovered some of the previous day losses. Brent surged 1.9% to USD77 per barrel while WTI surged USD72 per barrel as Middle East crisis continues and Libya supply outage from Sharara oilfield, which has been frequent target for local and broader political protests.

FBM KLCI: The FBM KLCI rallied for the fifth straight days, posting 0.2% higher performance to close at 1,499. Foreign investors sold a net MYR34.8 million worth of Malaysian shares.

US Equities: US equities closed mixed with Dow Jones and S&P500 fell 0.4% and 0.1%, respectively, while the Nasdaq gained a slight 0.1%.

Source: AmInvest Research - 10 Jan 2024