Snapshot Summary

Global FX: USD pared early gains but still rose 0.1%

Global Rates: UST was within a narrow range ahead of incoming drivers

MYR Bonds: Sustained rise in Treasury yields the day before continued to lift MGS yields

USD/MYR: The ringgit started the week on a weaker footing amidst a set of external downside factors

Macro News

Malaysia: Malaysia's PPI fell by 2.1% y/y in September, a decline from a modest 0.3% increase in August. This was the first instance of producer deflation since January, driven by a decrease in manufacturing prices (-1.5% compared to a 1% rise in August) and a significant decline in mining prices (-16.1% versus -8.3%).

UK: According to the CBI Distributive Trades Survey, retail sales volumes experienced a modest decline of 6% in October, following a slight increase of 4% in September. Consumer spending has been affected by uncertainty related to the Autumn Budget. Retailers anticipate flat annual sales for November, and seasonal sales have fallen short of expectations, with weak demand expected to continue.

US: The Dallas Fed Manufacturing Index stood at -3 in October, an improvement from -9 the previous month. This marks the mildest contraction in negative readings that began in May 2022.

Fixed Income

Global Bonds: The UST market closed within a narrow range as sentiment was cautious ahead of data this week. The market also awaits the Treasury Department unveiling its quarterly refunding plans for bond auctions. Data on tap include advanced GDP, PCE inflation, and employment data. These come before the FOMC meeting and US elections next week.

MYR Government Bonds: The rise in Treasury yields the day before continued to lift MGS yields yesterday, with the rise slanted on the front and belly of the curve. Onshore players are also cautious before the 7Y GII reopening at an Issuance size of MYR5.0 billion with no additional private placement.

MYR Corporate Bonds: Losses piled on in the PDS market yesterday, and this time, we noted AAA names and banking papers leading the losses. Notable trades include AAA-rated Danga 01/30, which rose 12 bps to 3.94%, and Danum 06/29, which closed 10 bps higher at 3.86%. Also Rantau 03/29 rose 12 bps to 3.91%.

Forex

US: The DXY index closed slightly higher after it pared early gains amidst a lack of data flow and following Israel's contained attacks on Iran, which avoided key energy and nuclear facilities. Traders were also on the sideline ahead of key job reports this week.

Europe: The euro was up 0.1%. ECB Vice President De Guindos gave a dovish tone by saying the disinflationary process is now "well on track", and there ought to be downside surprises in inflation as demand falls due to tight monetary policy. The GBP also closed in the green on Monday. On the data front, retail sales volumes fell by 6% in October 2024 after modest growth in September, with consumer caution due to the Autumn Budget uncertainties.

Asia Pacific: The Japanese yen weakened to its lowest level in three months against the dollar on Monday, wiping out the gains it made following the Bank of Japan's unexpected rate hike in late July. The currency remains pressured due to increased uncertainty in Japan's political and monetary landscape after an election setback for the ruling coalition. Meanwhile, the CNY depreciated by 0.1% and remained at its lowest point for over a month.

Malaysia: The ringgit started the week on a weaker footing as it fell the most among subdued Asian currencies amidst external downside factors. While it remains within the new consolidation range of 4.30-4.40, the risk for the ringgit to test the weaker part of the range is still possible despite the Fed's easing policy cycle. Monday's PPI data for September showed that producer inflation fell 2.1% y/y, which marked the first producer deflation since January 2024.

Other Markets

Gold: Gold prices fell slightly as Israel's limited weekend response against Iran eased some geopolitical concerns, though a weaker dollar continued to provide support.

Oil: Oil fell, with Brent down by 6.1% and WTI down by 6.4%, as geopolitical worries eased.

Source: AmInvest Research - 29 Oct 2024