Snapshot Summary

Global FX: Dollar trimmed gains following downbeat US job openings data

Global Rates: UST yields fell after reaching four-month highs

MYR Bonds: Local govvies continued to show weakness

USD/MYR: The ringgit weakened as narrative remains directed towards US politics and Fed policy

Macro News

Japan: Japan's unemployment rate dropped to 2.4% in September from 2.5% in August and aligning with market expectations. This marks the lowest rate since January, with the number of unemployed individuals decreasing to a 20-month low.

Germany: The GfK Consumer Climate Indicator for Germany increased to -18.3 for the month of November, up from a revised -21.0 (21.2 prior estimate) in the previous month. This is the highest level since April 2022, with sentiment improving for the second consecutive month and surpassing market expectations of -20.5.

US: The Dallas Fed Services Index climbed to 2.0 in October from -2.6 the previous month. This marks the first positive reading since May 2022, suggesting the beginning of a positive trend in regional activity. US Jolts jobs opening decreased by 418k to 7.443 million in September, down from a downward revised 7.861 million in August and falling short of market expectations of 7.99 million. This marks the lowest level since January 2021, signaling a cooling labor market.

Fixed Income

Global Bonds: US Treasuries showed strength as there was some pickup after yields had reached four-month highs. Sentiment was aided as the Jolts jobs number came in below expectations. Meanwhile, there was firm demand for the USD44 billion sale of 7Y notes on Tuesday, at 2.74x BTC.

MYR Government Bonds: Malaysian government bond market continued to show weakness to follow the UST yields continuing to climb ahead of the US trading open overnight. Elsewhere, the 7Y GII reopening auction garnered BTC slightly below 2.0x as sentiment remained guarded in the overall market.

MYR Corporate Bonds: Sentiment in the ringgit corporate bond market also continued to be weak. Markets remained wary over the rise in US yields ahead of key events in November. Despite that, there were still gains on select AAA papers though seen especially on the shorter maturities. Of these, Danum 02/25 fell 4 bps to 3.42% and Putrajaya 04/25 which shed 10 bps to 4.46%.

Forex

US: The dollar trimmed some of its gains but still closed Tuesday in the green following the September US job openings dropped to their lowest level in over three and a half years, with the previous month's figures also revised downward, indicating an ongoing slowdown in the labor market.

Europe: The pound strengthened, and volatility rose as traders awaited the UK budget. Finance Minister Rachel Reeves announcement of a 6.7% minimum wage increase for April, while emphasizing, alongside PM Keir Starmer, the need for strict fiscal measures to address the public finance gap and sustain investor confidence. Meanwhile, the EUR also went up 0.1%.

Asia Pacific: The Chinese yuan remained steady near its mid-August lows against the dollar, despite potential plans for over USD1.4 trillion in new debt to stimulate the economy. News flow indicate China's legislature is expected to approve a CNY6 trillion fiscal package, partly funded by special bonds, at the end of its 4-8 November meeting. The JPY weakened again as the currency has been under pressure following Japan's ruling coalition losing its parliamentary majority, while the BoJ is expected to keep rates steady at its upcoming policy decision.

Malaysia: Most of Asian currencies fell as the market narrative continued to be focused on the developments relating to US political space and the Fed to cut less aggressively moving forward. Ringgit weakened 0.4% on the day to close at 4.379.

Other Markets

Gold: Gold reached another record high on Tuesday, driven by safe-haven demand ahead of the US election, despite rising dollar and yield levels.

Oil: Oil prices eased as concerns about Middle East tensions reside, with the market shifting attention to global supply dynamics and OPEC production outlook.

Palm Oil: Traders' reluctance to place large fresh bets meant palm oil price was stuck in range. Nevertheless, prices remain near two-year highs amid tight supply expectations versus expectations of weak demand come the winter season.

Source: AmInvest Research - 30 Oct 2024