Snapshot Summary…

Global FX: The dollar was supported by safe-haven demand and continued hawkish Fed signalling

Global Rates: Move into Treasuries are currently driven by safe-haven demand due to the Iran-Israel geopolitical concerns as well as the release of weak China trade data

MYR Bonds: The local bond market weakened by 2 – 4 bps last Friday following the 10Y UST surge post-US inflation data release

USD/MYR: The ringgit fell on Friday following the stronger-than-expected US inflation data

Macro News

Singapore: Singapore's central bank left its monetary policy unchanged last Friday, as expected. Authorities are anticipated to look for signs of moderating inflation before considering loosening settings. The Monetary Authority of Singapore (MAS) said it will maintain the rate of appreciation of its exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER. The width and the level at which the band is centred did not change. MAS also said that current monetary policy settings remain appropriate.Singapore: Singapore’s GDP in the first three months of 2024 grew at its weakest q/q pace in a year as the manufacturing sector slowed, though economists see growth strengthening ahead. On a q/q seasonally adjusted basis, the economy grew by 0.1% in 1Q2024, down from 1.2% in 4Q2023, based on advance estimates released by the Trade and Industry Ministry.

China: Chinese exports fell more than expected last month, per official figures released last Friday, as the economy struggles to sustain its post-pandemic recovery. Exports sank by 7.5% y/y, while imports fell 1.9%, as per the General Administration of Customs data. A Bloomberg survey of economists had forecast exports to fall by 1.9% and imports to grow by 1%.

Fixed Income

Global bonds: Treasuries rallied on Friday but still ended lower for the week, with yields coming down from their highest levels YTD. The move into Treasuries was driven by safe-haven demand due to geopolitical concerns between Iran and Israel. At the same time, data showing China saw a drop in exports and imports in March also aided bond demand.

MYR Government Bonds: The local bond market weakened by 2 – 4 bps last Friday following the 10Y UST surge of over 10bps two days after the US CPI data release. However, the more modest m/m shift in the US PPI number partially capped the sell- off.

MYR Corporate Bonds: There was modest interest along the ringgit corporate bond market last Friday, whilst market players mainly were still away from their desks. Amongst the little traded, we noted 06/29 Danum (AAA) at 1 bp higher to close at 3.86%, and 10/28 TM Tech (AAA) dealt last at 3.85% or +6 bps.

Forex

United States: The dollar was supported by safe-haven demand and continued hawkish Fed signalling. In Fed-speak, Atlanta Fed President (FOMC voter) Bostic said he is not hurrying to cut rates. In contrast, Chicago Fed President (non-voter) Goolsbee said housing is the most noteworthy inflation component in the immediate term horizon.

Europe: Amid safe-haven bids aiding the USD, we noted both EUR and GBP weakened last Friday. Also, the EUR remained pressured after the dovish slant by the ECB after its policy meeting last week.

Asia-Pacific: The offshore yuan steadied near 7.24 and ended the week little changed, as the PBoC continued to set stronger-than-expected midpoint rates. Pressure on the yuan was felt midweek after the strong US inflation data release and weaker-than-expected domestic inflation in China. Strength in the dollar sent the yen to a 34-year low as investors waited for signs of possible intervention from BoJ officials.

Malaysia: The ringgit ended weaker against the US dollar on Friday following the stronger-than-expected US inflation data. The USD/MYR pair was seen at 4.771 at Friday’s close but was supported on the crosses vis-à-vis EUR, GBP, and SGD.

Other Markets

Gold: Gold prices fell, but we think this was due mainly to profit-taking. However, amid the geopolitical concerns and safe-haven demand, gold is seen today at a stronger level of USD2,363 per oz.

Crude oil: Prices are higher amid geopolitical concerns and further rise should depend on news of any possible escalation risks.

Source: AmInvest Research - 15 Apr 2024