Macro News

United States:

The annual inflation rate in the United States increased to 3.4% in December 2023 from the previous month's five-month low of 3.1%. The rise was attributed to a slower decline in energy prices, which dropped 2%, compared to a sharper decrease of 5.4% in November. Notably, gasoline prices fell by 1.9%, utility (piped) gas service declined by 13.8%, and fuel oil sank by 14.7%. The core inflation rate, excluding volatile food and energy prices, eased to 3.9%, slightly above expectations.

Japan:

The index of coincident economic indicators in Japan declined to 114.5 in November 2023 from the previous month's final reading of 115.9. This drop, marking the lowest level since March, suggests challenges for the Japanese economy in sustaining a robust post-pandemic recovery amid persisting inflationary pressures.

Malaysia:

Malaysia anticipates economic benefits in 2024 from semiconductor exports, driven by the global technology upswing, and a thriving tourism sector, according to the Minister of Investment, Trade, and Industry. Despite acknowledging challenges, he expressed cautious optimism, citing positive macroeconomic indicators in 2023, including expected 4% growth, lower inflation and unemployment rates, and an improving ringgit outlook.

Fixed Income

Global Bonds:

The UST curve rallied with 10Y yield falling 6 bps while 2Y yield dropping 11 bps, erasing early losses as investors shrugged off the slight pickup in inflation reading for December. Market players were focusing on the narrative of rate cut by the US Federal Reserve, despite the warning by Cleveland Fed Loretta Mester (voting), saying that the December CPI report shows there is more work to do (restrictive monetary policy). The steepening yield curve also followed the same trend seen in Bund curve. While 10Y Bund yield rose 2 bps, 2Y yield shed 2 bps. ECB official Boris Vujcic said that the central bank can start cutting interest rates early if inflation falls quickly, raising the prospect of ECB rate cuts soon.

MYR Government Bonds:

The local bond market was mixed as yields steepened, as the markets were cautious while waiting for the release of U.S. CPI after market.

MYR Corporate Bonds:

In corporate space, gainers again were seen outpacing losers despite the relatively flat movement in the ringgit sovereign bonds. Among notable trades were MYR40 million on 04/24 Danainfra Nasional (GG) done at 3.38%, MYR20 million on 06/27 Johor Corp (AAA) done at 4.19%, and MYR70 million on 12/29 MBSB (A3) done at 4.15%.

Source: AmInvest Research - 12 Jan 2024