AmInvest Research Reports

Fixed Income & FX Research - 03 Apr 2024

AmInvest
Publish date: Wed, 03 Apr 2024, 10:59 AM
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Snapshot Summary…

Global FX: The dollar fell to below 105-level despite data was positive for the dollar

Global Rates: The UST curve closed mixed following US job openings data and factory orders

MYR Bonds: The local government bond market was down as a reaction to the better US ISM manufacturing data

USD/MYR: The ringgit fell alongside the rupiah and baht

Macro News

United States: In February 2024, US job openings remained steady at 8.756 million, reflecting the enduring strength of the American job market. Despite a slight uptick in layoffs to 1.7 million, the highest since March 2023, the job market continues to exhibit resilience—job openings, although down from their March 2022 peak of 12.2 million, are still historically high. Compared to layoffs, the steady decline in job openings is a less painful way to cool the overheated labour market and reduce wage-driven inflation. This strength is further underscored by the unemployment rate, which has stayed below 4% for 25 consecutive months, a streak not seen since the 1960s.

Germany: Germany experienced a notable easing in inflation, with the rate dropping to 2.2% y/y in March 2024 from 2.5% y/y in February 2024, the lowest since June 2021, largely due to a decline in energy prices. This decrease was in line with the market forecast of 2.2%. This data is closely watched as it precedes the eurozone inflation figures, which are expected to show a rate of 2.6% for March, unchanged from February.

Fixed Income

Global bonds: US Treasuries bear steepened with sell-off concentrated on the curve's belly and back end while the front end was anchored. Traders loaded up bearish bets as the February job openings report by JOLTS showed still elevated job openings, factory orders grew faster than what the market expected (1.4% m/m vs. consensus 1.0% m/m), and cautious-sounding Fed speech by San Francisco Fed Mary Daly and Cleveland Fed Loretta Mester. By the end of the day, the 10Y UST yield rose 4 bps to 4.35%, while the 2Y yield shed 2 bps to 4.69%.

MYR Government Bonds: Overall, the local bond market was down by 1 – 2 bps yesterday as a reaction to the better US ISM manufacturing data during the Monday night session. However, we still see that the local market remained supported, especially on the back end of the curve, mainly due to suspected foreign interest, which has resurfaced lately and the upcoming auction of new issuance for GII 7.5 years and GII 15 years should continue keeping the interests from real money players.

MYR Corporate Bonds: Flows were heavier in the PDS market at MYR836 million, with some papers making their debut, including 03/50 LPPSA (GG) done at 4.19%, 10/24 Solarpack Suria (AA2) done at 3.93% and 09/25 VS Capital Management (AA) done at 3.83%.

Forex

United States: The dollar fell from above the 105 level on Tuesday, pushed by mixed to weaker global bond markets. There was cautious trading ahead of Fed’s Powell scheduled comments later this week and before Friday’s NFP data release. US data was positive for the dollar, though the greenback still fell from recent highs; both US job openings and factory orders increased in February.

Europe: Europe’s currency trading benefited from the lower dollar and the release of above-consensus final Manufacturing PMI readings from Germany, France, Spain, Italy, and the UK.

Asia-Pacific: The CNY and AUD weakened as sentiment was cautious for Asian currencies, whilst the DXY was still near the 105 level. However, the JPY was supported when Finance Minister Shunichi Suzuki said Japan could respond to JPY volatility.

Malaysia: The ringgit fell alongside the rupiah and baht yesterday, as regional FX sentiment was cautious after the US dollar recently shot up to above 105 on the back of firm US macro data.

Other Markets

Gold: Gold price surged 1.3% to a record high again at USD2,281/oz as the ongoing global geopolitical tension continues to fuel the precious metal’s bull run.

Crude oil: Crude oil prices settled higher as both Brent and WTI rose 1.7% on the back of supply concerns due to OPEC+ output cuts and attacks on Russian refineries.

Source: AmInvest Research - 3 Apr 2024

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