Snapshot Summary

Global FX: The dollar fell as polls suggest a tight race between Donald Trump and Kamala Harris

Global Rates: US Treasuries closed mixed in cautious trading on election day

MYR Bonds: Local govvies strengthened ahead of US elections

USD/MYR: Market volatility remains on the election outcome as the ringgit closed firmer

Macro News

Australia: The Reserve Bank of Australia (RBA) decided to keep its cash rate steady at 4.35% during its November meeting, maintaining this level for the eighth consecutive time and aligning with market expectations. The central bank observed that while headline inflation has dropped significantly, to 2.8% in 3Q2024 from 3.8% in 2Q2024, underlying inflation remains excessively high. This situation necessitates careful monitoring of potential inflationary pressures.

UK: The S&P Global UK Services PMI was revised slightly upwards to 52.0 for October, from an initial reading of 51.8 and down from 52.4 in September. This indicates that the UK service sector continued to grow, although the pace of expansion slowed for the second consecutive month, reaching its lowest level since November 2023.

US: Exports fell by 1.2% m/m after reaching a record high in August. The decline in exports was primarily due to reduced sales of pharmaceutical preparations, civilian aircraft, crude oil, and maintenance and repair services, although there were increases in shipments of government goods and services as well as transport. Meanwhile, imports rose by 3% m/m to a new record of USD352.3 billion.

The ISM Services PMI in the US unexpectedly surged to 56.0 in October, the highest level since August 2022, up from 54.9 in September and surpassing forecasts of 53.8.

Fixed Income

Global Bonds: US Treasuries closed mixed on election day amid a cautious market as polls suggest a close call for the presidential voting. On the flip side, sentiment was supported by firm demand at the 10Y UST auction where BTC was 2.58x for the USD42 billion sale. Meanwhile, Gilt yields rose further as sentiment remained pressured by the recent announcement of an expansionary UK budget.

MYR Government Bonds: The local government bond market strengthened ahead of the US elections yesterday as polls had suggested that Harris was leading. Sentiment was better yesterday after onshore players noted UST yields had declined from recent highs.

MYR Corporate Bonds: Alongside the better sentiment in the govvies space, the ringgit corporate bond market saw more active flows yesterday. However, net selling activity still dominated the market. Various AAA and AA names were seen traded. Leading the flows was AAA Danum 08/34 which rose 14 bps to close at 4.08%. This was followed by AA- MMC Corp 11/29 which rose 8 bps to 4.04%.

Forex

US: The US dollar fell on Tuesday as Americans cast their votes, with election results poised to influence the dollar's immediate future. Polls suggest a tight race between Republican candidate Donald Trump and Democrat Kamala Harris. On the data front, the US S&P Global Composite PMI was revised downward to 54.1 from initial reading of 54.3 albeit it remains above the 50-growth threshold, alongside with ISM Services PMI rose to its highest level since August 2022.

Europe: Both the EUR and GBP went up against the weaker USD. As focus currently centred on the US election, any developments that signals a win for the Republican candidate could erase those gains.

Asia Pacific: The USD/JPY fell 0.3% to 151.62, the lowest level in two weeks. In China on Tuesday, the yuan declined, pulling back from the three-week high it reached against the dollar the previous day. This drop came as some traders took profit amid the uncertainty surrounding the US presidential election. The Aussie dollar went up as well following the RBA's decision. The central bank kept the cash rate steady at 4.35%, continuing its unchanged stance for the eighth consecutive meeting. The Governor Michele Bullock maintained her hawkish tone noting there is a need for a clear progress toward meeting inflation goals before any changes are needed.

Malaysia: The ringgit closed on firmer ground, gaining 0.6% to finish at 4.346. This is amidst weaker dollar and as some traders took profit as the US went into election. Nonetheless, volatility remains with path ahead could turn either way depending on the election outcome.

Other Markets

Gold: Gold prices rose on Tuesday afternoon, supported by a weaker dollar and safe-haven demand as the US election reached its final voting day.

Oil: Oil price remained steady following its 5-day gains, as the market kept a close watch on the US presidential election and threat posed by Tropical Storm Rafael in the Gulf of Mexico.

Source: AmInvest Research - 6 Nov 2024