Snapshot Summary…

Global FX: The dollar index rose on Friday after the US payrolls rose more than expected

Global Rates: US Treasuries fell on Friday, sending yields to their highest levels YTD

MYR Bonds: The local bond market held steady ahead of the NFP last Friday, and the auction for the 7.5Y GIl 10/31 was well received with BTC above 3x

USD/MYR: Most EM Asia currencies were pressured last Friday ahead of the NFP release as well as recent hawkish comments from Fed officials

Macro News

US: March non-farm payrolls rose by 303k (consensus 200k). The 3-month average for total NFP increased to 276k from 272k000. Meanwhile, the February NFP was revised to 270k from 275k, but the January payrolls were revised to 256k from 229k. Aside from the March, the unemployment rate fell to 3.8% (in line with expectations) from 3.9% in February.

Australia: The February trade surplus reached AUD7.28 billion (expected surplus of AUD10.50 billion), down from a surplus of AUD10.06 billion the month before, as imports grew 4.8% m/m (January 1.4%), and exports fell 2.2% m/m (January 1.5%).

Fixed Income

Global bonds: US Treasuries fell on Friday, sending yields to their highest levels YTD. This was on the back of the strong March jobs report. The implied probability of a Fed cut in June fell to 46.6% from 60.4% before the NFP. The 10Y UST rose d/d by 9 bps and +20 bps w/w to end at 4.40%. German bund yields also rose after the release of US jobs.

MYR Government Bonds: The local bond market held steady ahead of the US non- farm payrolls last Friday. Meanwhile, the 7.5Y GIl 10/31 auction was well received with the final BTC marked above 3x. We think players were in for yield pickup, especially since this was a new issuance to the market. The average yield at the auction was 3.804% (high/low: 3.815%/3.780%).

MYR Corporate Bonds: The local corporate bond market also was steady on Friday but on light trading. We noted various AA names were picked up, though the net buying interest was slanted on <5Y tenors. These include 11/26 Gamuda (AA3) at 3.80% (-3 bps) and 10/24 Press Metal (AA2) at 3.73%, down by <1 bp.

Forex

United States: The dollar index rose on Friday after the US payrolls rose more than expected, which aided expectations that the Fed may be in no hurry to lower interest rates. In addition, hawkish comments from Dallas Fed President Logan and Fed Governor Bowman supported the dollar when they signalled little need to cut interest rates.

Europe: Both EUR and GBP fell versus the firm USD post-NFP release. As the probability of a June Fed cut fell to nearly 50%, the market is still pricing in an 86.6% probability of an ECB cut by June.

Asia-Pacific: The JPY was weak ahead of the NFP release as expectations were for a substantial number, and the JPY indeed went ahead to move lower Friday post the strong NFP. This was despite Japan Finance Minister Shunichi Suzuki, who reiterated the government's view that it should take appropriate action against sharp yen falls.

Malaysia: Most EM Asia currencies were pressured last Friday ahead of the NFP release and by recent hawkish comments from Fed officials. We anticipate pressure to remain on MYR in the coming week post the strong NFP, though with Malaysia on the Eid holiday midweek may temper the MYR movement somewhat.

Other Markets

Gold: Gold prices rallied by 1.7% to USD2,330/oz, partly aided by risk appetite and, with that, expectations of central bank buying to shore up reserves.

Crude oil: Brent rose further, with Brent up by 0.6% to close above USD91 per barrel amid geopolitical tensions.

Source: AmInvest Research - 8 Apr 2024