Snapshot Summary…

Global FX: Dollar was relatively unchanged following mixed to weaker data

Global Rates: US Treasuries closed mixed as late net selling pressure pared early day gains

MYR Bonds: The govvies market was mixed yesterday with sentiment remaining affected by weak global bonds

USD/MYR: Ringgit strengthened amidst mixed regional currencies performance

Macro News

Japan: In the first month of 2024, Japan’s consumer inflation rate fell to 2.2%, slower than previous month’s 2.6% y/y. Its core inflation, which excludes fresh food but includes fuel costs, also grew slower at 2.0% y/y from 2.3%, but above market forecast of 1.8% y/y.

United States: New orders on US durable goods dropped 6.1% m/m in January 2024, the largest drop since April 2020 when Covid first started to spread. Market was looking at a slower 4.5% m/m decline. At the same time, new orders for manufactured non- defence capital goods excluding aircraft, a close watched proxy for business investment on equipment grew only by 0.1%, rebounding from 0.6% m/m drop in the prior month but easing from 0.9% m/m growth in November 2023.

Fixed Income

Global bonds: US Treasuries closed mixed as late net selling pressure pared early day gains. There was continued pressure from Fed-speak. Fed Governor Bowman (FOMC voter) signalled a hawkish slant, saying she will remain cautious in considering changes to the fed funds rate. On the flipside, macro data was supportive for bonds, after US durable goods orders disappointed. Global bond markets still await more data this week, including US PCE inflation, which meant there was a lack of support for bonds yesterday; we noted also Bunds and Gilts yields rose 3-4 bps along the 10Y tenors.

MYR Government Bonds: The govvies market was mixed yesterday with sentiment remaining affected by weak global bonds. Sentiment was also affected by concerns over the weak ringgit though the local currency was firmer yesterday. Aside, we will be having auction for the 15Y Gll on Thursday and we expect the auction to be supported as we think some local players still prefer long bonds at yields above 4%.

MYR Corporate Bonds: There was moderately firmer movement in the corporate bond market yesterday, but gains were mostly slanted along higher grade AAA and AA1 names. Larger flows include those on 02/34 PASB (AAA) at 4.00% (-3 bps), 02/25 Sabah Dev (AA1) at 4.16% (-1 bp), and 01/30 PASB (AAA) at 3.98% (+6 bps).

Forex

United States: Dixie erased early gains to close Tuesday at 103.83, unchanged from the previous day’s level following weak durable goods data and the drop in consumer confidence in Conference Board report. But some support were found from hawkish Fed speech. Fed Governor Michelle Bowman reiterated that currently it is too soon to cut interest rates.

Europe: In the region, the EUR saw some sell off against the dollar, falling 0.1% to 1.084 while the British pound was relatively unchanged at 1.269. Data-wise, Germany’s Consumer Climate Indicator by Gfk saw slight improvement on its headline reading, up to -29 heading into March 2024 from February’s 11-month low of 29.6.

Asia-Pacific: The yuan held steady at 7.198 after PBoC set the yuan fixing prior to market opening at 7.1057, firmer than previous fixing of 7.1080, putting floor on yuan’s weakness. Investors were also cautious ahead of key US and local Chinese PMI data. In Japan, the yen firmed 0.1% to close the day at 150.51 following firmer-than- expected inflation data. This nudged the market to price in more possibilities for the BoJ to exit its negative interest rate policy soon.

Malaysia: The ringgit rose on Tuesday, gaining 0.3% to 4.761 against the USD setting fourth session of rally out of the past five sessions. This is amidst mixed regional currencies performance as investors await key data later this week.

Other Markets

Gold: Gold price was steady at USD2,030/oz ahead of key PCE Price Index data which may provide some hints on US Fed rate outlook.

Crude oil: Brent gained 1.4% while WTI rose 1.7%, supported by the prospects of further cuts by OPEC and the ongoing geopolitical tension.

Source: AmInvest Research - 28 Feb 2024