Snapshot Summary…

Global FX: The dollar posted its highest level in two weeks

Global Rates: UST 10Y yields found resistance as weak data and firm demand 2Y UST auction supported the tenors

MYR Bonds: Onshore govvies market continued its upbeat move along with interests on the IRS front

USD/MYR: Ringgit continued its winning streak but cautious remained ahead of domestic inflation data

Macro News

Eurozone: The Euro Area's consumer confidence indicator rose by 1.0 points in July 2024, marking its highest level since February 2022. Optimism has been boosted by the European Central Bank's recent interest rate reduction in June following a gradual slowdown in inflation. Worries over political issues in France have diminished following parliamentary elections, with concerns about one-party dominance being replaced by fears of legislative deadlock.

United States: Existing home sales in the US dropped by 5.4% m/m in June 2024 compared to the previous month, reaching a seasonally adjusted annualised rate of 3.89 million units. It marks the fourth consecutive monthly drop in existing home sales, coinciding with a surge in the median sales price. The Richmond Fed manufacturing index dropped for the second successive month to -17, hitting its lowest point since May 2020. The most significant decline is notable in shipments, followed by the volume of new orders.

Fixed Income

Global bonds: UST 10Y yields rose but found resistance at the 4.27% level. Weak existing US home sales in June (down 5.4%) and firm USD69 billion auctions of the 2Y UST supported government bonds, but there was still caution in the market ahead of PCE inflation data print this week. Furthermore, there’s more incoming supply this week, encompassing USD70 billion in five-year notes Wednesday and USD44 billion in seven-year notes the following day.

MYR Government Bonds: Onshore govvies market continued its upbeat move with interests seen on the front to the belly of the curve. There was also receiving interests on the IRS front. The sentiment was aided by support in the UST market, hearing Kamala Harris was easing to garner enough delegates for the Democratic nomination.

MYR Corporate Bonds: More interest in corporate bonds was seen yesterday amid a healthy risk appetite. Net buying interest was seen in various AAA and AA names, and we noted that the power sector and banking papers were leading the way. Notable trades include SEB 07/33 (AAA), down 2 bps to 3.95%, and AA3 Edra 01/34, down 13 bps to 4.11%.

Forex

United States: The dollar posted its highest level in two weeks as traders braced themselves ahead of key series US economic data, including S&P Global PMI later tonight, the first estimate of 2Q2024 GDP on Thursday and PCE Price Index data on Friday.

Europe: The euro fell 0.3% despite the improvements in the consumer confidence indicator in the Eurozone region to its highest level since February 2022. Meanwhile, the British pound also fell 0.2% amidst a lack of data drive from the UK.

Asia-Pacific: The JPY extended its winning streak, gaining sharply by 0.9% to close Tuesday at 4.673, as data yesterday suggest traders are trimming their short positions on the yen ahead of next week’s BoJ meeting. The CNY gained slightly despite the dollar standing its ground after the PBoC set the yuan fixing daily midpoint marginally stronger at 7.1334 vs the prior 7.1335. The AUD was also on the downside as commodity prices retreated, taking a cue from the 0.6% drop in the Bloomberg Commodity Index.

Malaysia: The ringgit stood firm amidst the upside in the dollar and closed the day at 4.673 during a wider trading range of 4.669 – 4.684. Malaysia’s inflation data is due to be released today in the afternoon, with Bloomberg consensus suggesting the number could fall between 1.9% and 2.6%.

Other Markets

Gold: Gold prices rose 0.5% to USD2,410/oz as market attention turns to key US economic data due later this week.

Crude oil: Oil prices dropped further for the fourth straight session, with Brent falling 1.7% and WTI dropping 2.0%.

Source: AmInvest Research - 24 Jul 2024