Snapshot Summary…

Global FX: The dollar was stable amidst the escalation of Middle-East geopolitical tension

Global Rates: Treasuries posted gains on Friday but maintained their weekly losses

MYR Bonds: Last Friday saw some net buying interest in the MGS market

USD/MYR: Ringgit firmed slightly despite the stronger dollar during the day

Macro News

Japan: Japanese consumer inflation expanded slower to 2.7% y/y in March 2024, compared with 2.8% y/y in the prior month but within the market forecast. Excluding fresh foods, core inflation also grew slower to 2.6% from 2.8% (consensus: 2.7% y/y), marking 24 straight months of staying above BoJ’s 2.0% target. Prices for fuel and light have dropped, and energy subsidies from the government will end in May 2024.

United Kingdom: The UK’s retail sales volume in March 2024 was flat after a marginal 0.1% growth in the prior month. Reports showed that the declines in food stores and non-store retailers offset growth in automotive fuel and non-food store sales.

Malaysia: The Department of Statistics Malaysia (DOSM) advanced estimate GDP for the first quarter of 2024 suggested that Malaysia’s economy may have expanded by 3.9% y/y, faster than 4Q2023’s figure at 3.0% y/y. Sectoral-wise, we saw all sectors posted gains, with the largest growth coming from construction (9.8% y/y), followed by mining & quarrying (4.9% y/y) and services (4.4% y/y).

Fixed Income

Global bonds: Treasuries posted gains on Friday but maintained their weekly losses. Friday saw buying into the UST market on the back of safe haven demand as Israel retaliated against the recent Iranian attack, but the absence of further escalation on the day meant UST pared gains amid a day when there was no release of market- moving US macro data. Thus, we do not think that the said tension is as significant as initially feared, for now. Meanwhile, Bunds closed with losses, seeing no escalation to the Middle East geopolitical risks on Friday.

MYR Government Bonds: Last Friday, we saw some net buying interest in the MGS market as the UST yields fell due to news of Israeli retaliation to Iran’s recent attacks. However, we noted larger gains were absent, seeing that sentiment remains cautious after recent comments from Fed officials pointing to higher interest rates for longer.

MYR Corporate Bonds: Ringgit corporate bonds saw mixed movement on Friday whilst the focus was on geopolitical risks and the Fed's less dovish narrative. In any case, we did note net buying interest in AAA Cagamas on Friday, though these involved shorter tenor Cagamas maturing 2024-2028.

Forex

United States: The Dollar index (Dixie) ended Friday on steady ground amidst the escalation of geopolitical tension. There were mixed tones among the Fedspeak. Richmond Fed Thomas Barkin said the US economy is not showing signs of running too hot, while Chicago Fed Austan Goolsbee noted that the progress on disinflation has paused.

Europe: EUR held its ground while the British pound fell on the day. ECB officials mostly maintain their views that the central bank's first rate cut could happen in June, though they are still cautious about what will happen after that. In the UK, the stagnant growth in retail sales re-sparked the fears of recession.

Asia-Pacific: Asian currencies mainly were tilted towards the downside on Friday. The CNY closed the day relatively unchanged at 7.239 after the PBoC maintained the daily reference rate as the dollar gained ground this past week. The JPY was also stable as investors waited for BoJ’s policy decision this Friday and after Japan’s headline consumer price pressure grew within expectations. The AUD fell 0.2% amidst a risk- averse environment.

Malaysia: Ringgit stood slightly by 0.05% to finish at 4.783 after trading within the range of 4.779 – 4.792 despite the stronger dollar during the day. Malaysia’s advanced estimate GDP for 1Q2024 was slightly positive, growing faster at 3.9% y/y compared to the previous quarter’s 3.0% y/y. Despite the ringgit staying below the 4.80 mark amid the height of the Iran-Israel confrontations, we believe that the local note will remain to trend below the said level.

Other Markets

Gold: Gold prices climbed 0.5% to USD2,392/oz amidst safe-haven demand due to the escalation of Middle-East tension after Israel launched retaliatory attacks on Iran, though the latter downplayed the attacks.

Crude oil: Oil prices rose slightly as Brent gained 0.2% while WTI climbed 0.5% as market players weighed the latest development in Middle-East tension.

Source: AmInvest Research - 22 Apr 2024