Snapshot Summary…

Global FX: Dollar demand was steady following healthier-than-expected US durable goods order

Global Rates: US Treasuries closed higher, but gains were pared as players reacted to good US economic data

MYR Bonds: The onshore government bond market was steady but closed within a tight range

USD/MYR: The ringgit went up amidst front-footing regional currencies

Macro News

United States: In February 2024, orders for durable U.S. manufactured goods saw a more-than-expected increase, indicating a potential recovery in business spending on equipment and maintaining positive economic growth prospects in the first quarter. The headline reading grew 1.4% m/m after a sharp 6.9% m/m drop in the prior month, with notable increases in transportation orders, primarily driven by a surge in civilian aircraft orders. Additionally, there were advancements in orders for primary and fabricated metals and machinery. However, the sector still faces hurdles, with declines in orders for computers, electronic products, and electrical equipment. The orders for non-defence capital goods and excluding aircraft, which can be considered a proxy for the business spending plan, expanded by 0.7% m/m, the first gains in three months.

Germany: The German GfK Consumer Climate Indicator for April slightly improved from -28.8 to -27.4, marginally better than economists' forecast of -27.9. Notably, according to the survey, a decrease in the willingness to save fell by 5 points to 12.4 points, indicating a cautious outlook for consumer spending. Willingness to buy dipped slightly by 0.3 points to -15.3, reflecting consumer concerns about the economy and job security.

Fixed Income

Global bonds: US Treasuries closed higher, but gains were pared as players reacted to durable goods orders, which rose 1.4% in February (consensus 1.3%) after falling 6.9% in January. The USD67 billion 5Y note auction also garnered a lower BTC of 2.41x vs 2.49x average in the past 12 auctions.

MYR Government Bonds: The onshore government bond market was steady but closed within a tight range amid a lack of fresh market drivers. The ringgit finding support yesterday around 4.720 at least aided onshore bond sentiment.

MYR Corporate Bonds: Yesterday, we noted relatively heavy flows in the corporate bond market, but alongside that was net selling activity on some AAA and AA papers. Heavier flows were reported on names such as 07/27 Edra (AA3), which closed unchanged at 3.95%, and 04/29 SP Setia (AA), which fell 1 bp to 3.98%.

Forex

United States: The dollar index held steady on Tuesday, recovering some early losses amidst suspected month-end flow and following the higher-than-expected growth in US durable goods orders.

Europe: The EUR and GBP fell slightly by 0.1% as the US released another round of economic resiliency signals. However, GBP found some support after BoE’s Katherine Mann said financial markets are currently pricing in too many rate cuts, and it is doubtful that the central bank would move first before the BoE.

Asia-Pacific: The Chinese yuan weakened by 0.1% to finish the day at 7.217 despite the stronger yuan daily fixing midpoint at 7.0943, stronger than the previous day’s fixing at 7.0996. Newsflow from Bloomberg showed that China will sue the US at the World Trade Organization (WTO) on rules related to sourcing batteries for electric vehicles from China. In the meantime, the JPY fell 0.1%.

Malaysia: The ringgit strengthened and briefly touched a 4.716 intraday high level before closing at 4.721 amidst stronger regional currencies.

Other Markets

Gold: Gold price posted a higher closing price at USD2,179/oz, though it pared early gains as traders await more hints on the Fed interest rate path.

Crude oil: Crude oil prices fell as Brent shed 0.6% while WTI had a larger of 1.5% after data showed higher build-up in US inventories at 9.3 million barrels last week.

Source: AmInvest Research - 27 Mar 2024