Snapshot Summary

Global FX: The dollar rallied as Trump won the US presidential election

Global Rates: US Treasury yields as inflation expectations rose with Trump but the focus also turns towards monetary policy as the Fed meets this week

MYR Bonds: Local govvies weakened as global eyes focused on the US election yesterday

USD/MYR: The ringgit fell along with regional currencies

Macro News

Malaysia: BNM decided to maintain its OPR at 3.0% for the ninth consecutive meeting, which is in line with our expectations. The policy supports the economy while reflecting the current views on inflation and growth prospects. However, the growth outlook could be challenged by weaker external demand and fluctuations in commodity production. As mentioned in our latest report, "OPR Unchanged Amid Growth and Inflation Considerations", we opine that the resilient domestic demand, further supported by recently announced measures including the minimum wage hike and continued implementation of investment projects, will persist into 2025.

Eurozone: The HCOB Eurozone Services PMI increased to 51.6 in October, up from 51.4 the previous month. This figure was revised from an initial flash estimate of 51.2 and slightly exceeded early market expectations of 51.5.

US: The highly anticipated 2024 US presidential election has concluded, with Donald Trump being elected as the 47th president, marking his second term. He thwarted Kamala Harris's bid to become the first woman president by securing over 270 Electoral College votes.

Fixed Income

Global Bonds: US Treasuries closed with losses as yields rose >10 bps on continued 'Trump trade' as he won the presidential election. Now, the focus turns to this week's FOMC meeting, and short- to long-term UST yield movement could be an interplay between fiscal and monetary policy.

MYR Government Bonds: The local bond market posted losses as Republican Donald Trump closed in on the presidency, and the UST curve steeped further, with the 10Y UST up 14bps. However, we noted some buying on dips post MPC's decision to leave OPR unchanged at 3.00% in the afternoon session.

MYR Corporate Bonds: Corporate bonds lacked interest yesterday amid the weakness in the government market. Losses led the thin session, including AAA-rated Amanat Lebuhraya 10/35, which rose 14 bps to 4.22%. Also, Amanat Lebuhraya 10/30 rose 10 bps to 4.92%.

Forex

US: We noted broad dollar buying as it surged to a four-month peak on Wednesday after Donald Trump won the US presidential election, with his policies on immigration, taxes, and trade anticipated to boost US growth and inflation and may subdue Fed's rate cut path. Republicans also secured a Senate majority, while control of the House is still uncertain.

Europe: The euro sank following Trump winning the US presidential election for the second time. Additionally, the euro was also weighed by its political developments. It was reported that German Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner on Wednesday.

Asia Pacific: The JPY weakened as well, and the Chinese yuan, one of the currencies at high risk of being on the receiving end of the projected high tariff imposed by the new US president, fell sharply by 1% yesterday to its lowest level since August.

Malaysia: Asian currencies, including the ringgit, succumbed to the surging dollar post-US election. Expected abrasive foreign trade policy by Trump would potentially affect EM Asia currencies. Ringgit trading was muted as BNM maintained the OPR at 3.00%.

Other Markets

Gold: Gold fell sharply on Wednesday, by 3%, as the dollar and Treasury yields soared after Donald Trump was re-elected as US president.

Oil: A higher dollar also meant buying commodities was more expensive, thus lowering oil prices. Brent dropped 0.8%, while WTI fell 0.4%.

Source: AmInvest Research - 7 Nov 2024