Snapshot Summary…

Global FX: The US Dollar rose slightly overnight while other major currencies were mixed against the dollar

Global Rates: US Treasuries closed weaker in reaction to the release of better-than- expected US durable goods orders data

MYR Bonds: The onshore government bond market saw weakness yesterday

USD/MYR: The Ringgit reacted to the drop in USD in the previous session and firmed below the 4.78 level

Macro News

United States: New orders for US manufactured goods surged 2.6% m/m in March 2024, slightly beating the market forecast of 2.5% m/m and healthier than the previous month’s reading of 0.7% m/m. The robust demand for transport equipment can be attributed to the fastest growth since November 2023. But orders for non-defence capital goods, excluding aircraft, a proxy for monitoring business spending plans, grew 0.2% m/m after 0.4% m/m.

Australia: Australia’s quarterly inflation rate expanded slower by 3.6% y/y in 1Q2024 vs. 4.1% y/y in 4Q2023 but higher than market expectations of 3.4% y/y. On a quarter- on-quarter basis, the headline inflation rate grew 1.0% q/q, faster than the previous quarter's 0.6% q/q and market forecast of 0.8% q/q. The quarterly inflation reading is higher than the recently released monthly CPI indicator of 3.43% y/y average throughout the first three months of 2024.

Fixed Income

Global bonds: US Treasuries closed weaker in reaction to the release of better-than- expected US durable goods orders data and amid this week’s large Treasury notes auctions. US durable goods increased 2.6% m/m in March (consensus 1.8%) following a downward revised +0.7% (from 1.4%) in February. Overnight saw USD70 billion worth of the 5Y UST being auctioned, where BTC was 2.39x versus 2.48x average BTC at 12 previous auctions of the same tenor.

MYR Government Bonds: Yesterday, the onshore government bond market saw weakness following the bearish sentiment of global markets. Offshore drivers include weakness in UST, reaction from Indonesia raising its policy rate by 25bps, and Australia's CPI beating estimates at 3.5%. We expect the local bond space to remain pressured amid ongoing UST weakness in the near term.

MYR Corporate Bonds: A mixed movement was seen in the onshore corporate bond market yesterday, alongside weak sentiment in local governments and global bond markets. Upward yields include those on PSEP (AAA) tranches with 3-7Y maturities and Edra Energy (AA3) on 10-15Y tenors.

Forex

United States: The dollar rose overnight alongside a rise in UST yields on the back of firm durable goods data. Based on futures trading, the probability of a June Fed cut remains low, near 20%; thus, the Fed outlook remains dollar supportive.

Europe: The Euro lost out versus a firm US dollar, though the Dixie has slipped below 106. The euro decline was despite early support from the German April IFO business climate index rising more than expected. Also, comments from ECB Governing Council member Nagel were euro-supportive when he said an ECB cut in June may not mean the start of a series of rate cuts.

Asia-Pacific: Currencies in Asia were mainly on the upside on the day, led by the KRW and IDR. The Aussie dollar strengthened on the back of faster-than-expected inflation growth in Australia. However, the JPY continue to be on the bearish trend, hitting beyond 155-level for the first time in three decades. This also props up the risks of intervention by authorities, and traders are on the lookout for any official statements by officials. The CNY also moved lower despite the PBoC fixed yuan reference rate pre-session at 7.1048 per dollar, firmer than 7.1059 in the prior session.

Malaysia: The Ringgit reacted to the drop in USD in the previous session and firmed below the 4.78 level. It was traded within a tight range of 4.773 – 4.780. Today's risk for the ringgit is tilted towards the weaker side as last night’s optimism on US core durable goods order and JPY’s soft patches in the 155-level could spill over to the ringgit.

Other Markets

Gold: Gold prices fell 0.3% to USD2,316/oz as market players await key inflation data tomorrow for the key Fed Funds rate outlook path.

Crude oil: Oil prices closed in red, with Brent shedding 0.5% while WTI dipped 0.6% ahead of key inflation data releases.

Source: AmInvest Research - 25 Apr 2024