Macro News

United States : Risk markets rallied as US non-farm payrolls increased by 353K in January, beating economists' expectations for a gain of 180K. Average hourly earnings increased 0.6% after rising 0.4% in December. December’s NFP was revised to 333K from 216K and November’s figure was revised to 182K from 173K.

Singapore: The purchasing managers’ index (PMI) by the Singapore Institute of Purchasing Materials (SIPMM) rose marginally by 0.2 points to 50.7 in January 2024, up from 50.5 in the prior month, suggesting a slight further improvement and continued to pick up in the manufacturing sector, expanding for the fifth consecutive months. The improved headline reading was attributed to faster expansion of new orders, new exports and input purchases.

Fixed Income

Global bonds: UST yields surged on Friday, thrusted on by the solid non-farm payrolls numbers. This pared down UST weekly gains which had earlier come on the back of traders focusing on growth risks despite the Fed signalling it was far to a rate cut decision at last week’s FOMC meeting. Bloomberg’s WIRP tool places the probability of a rate cut by March at 19.3% probability and a May cut at 82.6% probability (down from 37.8% and 96.9% pre-NFP release). On Friday, the 10Y UST rose by 14 bps but was down 12 bps for the week.

MYR Government Bonds: The Malaysian government bond market gained further traction last Friday with yields down 2-4 bps across the curve on the back of the UST rally the day before which in turn was after news New York Bankcorp posting a surprise loss and its stock price dropping 40%. However, the MGS movement came before Friday’s NFP print and ensuing UST losses. Instead, MGS took a cue from weaker economic data including ADP jobs number at 107k vs 150k forecast and initial jobless claims of 224k vs 212k forecast.

MYR Corporate Bonds: Malaysian corporate bonds continued to see net buying activity overshadowing net selling pressure. Last Friday’s buying activity was focused more on higher-grade papers with a slant towards infrastructure and banking sector papers. These include 10/30 Maybank IMTN (AA1) which fell 5 bps to 3.80% and 08/35 YTL Power (AA1) which fell 3 bps to 4.10%.

Forex

United States: The US dollar index jumped to a seven-week high, rallying on Friday after data showed that employers added far more jobs in January than expected, reducing the chances of near-term Federal Reserve interest rate cuts. The DXY index surged by 0.8% to 103.92.

Europe: The euro and pound both fell versus the rise in the US dollar post-release of the much larger than expected US jobs data for January and upward revisions in November and December. Aside from that, there was little in terms of pertinent European economic data to sway the FX movement.

Asia-Pacific: CNY held steady against the USD but this was mainly ahead of the NFP release late Friday. This was also despite the usual US dollar demand ahead of the Lunar New Year holidays. With the holidays coming up, there’s a possibility for the yuan to move in a relatively narrow range as many traders may have already gone on their holidays. We note the JPY fell sharply post the latest NFP print, down 1.3%.

Malaysia: The ringgit firmed 0.3% to 4.717 and traded within a large range of 4.715 and 4.732 after Thursday’s Federal Day holiday but ahead of the robust NFP data. This morning, the ringgit opened much higher at 4.739 during the Tokyo session as a reaction to a stronger DXY on Friday night.

Other Markets

Gold : Gold price fell 0.7% to USD2,040/oz as the dollar and UST yields traded higher.

Crude oil : Crude oil prices fell as the healthier labour market data suggests that the US Fed will not cut interest rate soon and in turn, may dampen demand towards crude oil amidst stretched-out restrictive monetary policy. Brent fell 1.7% while WTI shed 2.1%.

Source: AmInvest Research - 5 Feb 2024