Snapshot Summary

Global FX: Dollar rose on Friday, marking its fourth consecutive week of gains

Global Rates: 10Y yield posted its largest six-week increase in nearly a year

MYR Bonds: Local govvies showed little activity amid lack of interest

USD/MYR: Ringgit stood firm despite strengthening dollar

Macro News

UK: The GfK Consumer Confidence indicator in the UK fell slightly to -21 in October 2024, down from -20 in September, marking the lowest point this year. Concerns over potential tax increases in next week's Budget weigh heavily on households and businesses.

New Zealand: The ANZ Roy Morgan Consumer Confidence Index in New Zealand declined to 91.2 in October 2024, down from 95.1 in September, breaking a three-month upward trend. Following a cautious recovery in consumer confidence since July, October brought renewed uncertainty, as decreasing interest rates provided only limited immediate relief. Although upcoming interest rate cuts from the RBNZ may offer some support, labour market issues dampen confidence, particularly in areas like Wellington, where negativity is most pronounced. However, rising house prices contribute to overall confidence, even as inflation remains stable within the RBNZ's target range.

US: New orders for manufactured durable goods in the US decreased by USD2.2 billion to USD284.8 billion in September 2024, following a revised 0.8 % decline in August and compared with market expectations of a 1% fall. The University of Michigan consumer sentiment for the US was revised higher to 70.5 in October 2024 from a preliminary of 68.9, marking a third consecutive month of rises and reaching the highest level in six months.

Fixed Income

Global Bonds: US government debt weakened on Friday, pushing the 10Y yield to its largest six-week increase in nearly a year, following stronger-than-expected data. Heightened market volatility, influenced by mixed economic signals and pre-election uncertainty, has investors closely watching upcoming indicators. In September, non-defense capital goods orders, excluding aircraft, a measure of business investment, rose 0.5% m/m, surpassing expectations. Additionally, October consumer sentiment was revised higher to 70.5 from 69.

MYR Government Bonds: The Malaysian government bond market changed slightly despite UST yields being slightly lower the day before, down from recent highs near 4.26%. Authorities announced details for the 7Y GII reopening, where the issuance size is at MYR5.0 billion with no additional private placement.

MYR Corporate Bonds: Lacklustre interest in the corporate bond space continued, with only a few papers traded. The heavier traded include AAA-rated Mercedes MTN 08/26 at 3.74% (up 5 bps) on MYR40 million volume and AA3-rated Maybank perp at 4.06% (-7 bps) on MYR30 million volume.

Forex

US: The dollar index climbed on Friday, positioning the greenback for a fourth consecutive week of gains. This rise followed data from Friday, which built on top of what was released earlier in the week, subdued aggressive interest rate cut expectations by the Fed. At the same time, investors focused on the upcoming key payrolls report.

Europe: The euro declined against a stronger dollar despite German business sentiment rising more than expected, breaking a four-month slump and raising hopes for economic improvement by year-end despite ongoing industrial challenges. Meanwhile, ECB President Christine Lagarde affirmed that inflation in the eurozone is on course to meet the 2% target next year, with French central bank chief Villeroy de Galhau noting that the ECB's 3.25% deposit rate remains distant from a neutral level.

Asia Pacific: The JPY weakened on Friday ahead of Sunday's key general election. As of writing, the ruling party led by the Liberal Democratic Party (LDP) is losing its majority in parliament. The BoJ is expected to maintain its ultra-low interest rates in its upcoming meeting but potentially hint at a shift toward a less dovish stance. This approach reflects aims to discourage speculative pressure on the yen. In China, the yuan remained stable against the dollar on Friday amidst concerns over escalating trade tensions if Donald Trump wins the upcoming election. The PBoC set the midpoint rate at 7.1090 per dollar, aligning with market expectations and showing no apparent intervention to counter the recent rise.

Malaysia: The ringgit stood its ground on Friday despite the dollar's strength. Nonetheless, it has remained hovering at its weakest level for over a month.

Other Markets

Gold: Gold climbed to USD2,748/oz, rebounding from prior profit-taking as heightened Middle East tensions and uncertainty over the upcoming US election increased demand for safe-haven assets.

Oil: Crude oil prices ended higher on Friday but stayed within a narrow range ahead of the US presidential election, with supply levels remaining limited and robust demand from China.

Source: AmInvest Research - 28 Oct 2024