Macro News

Thailand : Bloomberg reported that Thailand’s central bank has strongly pushed back against calls for lowering the cost of borrowings, quoting a Bank of Thailand official saying that interest rates cuts cannot fix structural economic problems. The current benchmark rate and decade-high level of 2.50% is “appropriate” to support the economy as well check inflation, BoT Assistant Governor Piti Disyatat reportedly said at a briefing in Bangkok on Monday, and that future decisions will be guided by the outlook for prices, growth and financial conditions.

Germany : Germany continued to avoid a recession amid the energy crisis, reporting that GDP fell 0.3% between October and December. However, the prior three months number revised up to 0% from -0.1%, Germany has avoided two straight quarters of contraction but GDP also shrank 0.3% over the full 12 months which is the first downturn since the pandemic.

Fixed Income

Global bonds: Generally muted movement in global bond markets overnight amid the US public holiday. Yet, there was some modest net selling activity witnessed in German bunds as markets await anticipated remarks from ECB President Lagarde this week. The 10Y Bunds dealt 5 bps higher to close at 2.23% though there was support after rising above the 2.20% level as Germany reported its 2023 GDP contracted by 0.3%.

MYR Government Bonds: The Malaysian bond market remained supported partly due to a stable UST market due to the US public holiday on Monday as well as aided by firm regional bond performance - except for Thailand and China. Thailand's central bank made a surprise push back against calls for lowering interest rates this year and China's central bank held its 1Y medium-term lending facility rate steady at 2.5%.

MYR Corporate Bonds: Mostly firm trading of ringgit corporate bonds was reported yesterday alongside the support seen in the government bond market. Gains were seen across the rating segments. These include long tenor 03/43 TNB Power Gen (AAA) at 4.22% (-2 bps) and A3 rated 12/31 MBSB Bank at 4.45% (-32 bps).

Forex

United States: Dollar was little changed on Monday amidst cautious mood due to US Martin Luther King public holiday.

Europe: The pound sterling traded in a tight range ahead of a busy data week. Among data that will be released are the UK inflation (median consensus: 3.8%) and unemployment rate data (median consensus: 4.2%). This is following the higher-thanexpected November GDP growth last week, signalling that the UK’s economy may skirt a recession. The Euro was also in range but there was some pressure from Germany’s decline in growth for the full year 2023 at a marginal 0.3%, after a 1.8% y/y growth in 2022.

Asia-Pacific: The JPY depreciated 0.6% to near 145.73, and closer to its lowest level since mid-December. The market consolidated some gains made last Friday when the dollar was closed little changed. In China, the yuan slid after the PBoC surprised the market by keeping its 1Y medium-term lending facility (MLF) to the banking system unchanged at 2.50%.

Malaysia: The MYR continued to weaken versus the US dollar yesterday, down another 0.5% to 4.671 but this was mostly due to a lack of fresh market drivers. Also, a steady USD, trading above 102, and a sluggish sentiment leading to the CNY meant the lack of impetus for MYR strength.

Other Markets

Gold : Precious metal gold remained supported, up 0.4% investors focused on Middle East tensions and Fed rate cut expectations.

FBM KLCI: The FBM KLCI rose to above the 1,500 level as sentiment was aided by risk appetite in the region.

Source: AmInvest Research - 16 Jan 2024