Snapshot Summary

Global FX: Trump trade still in place as DXY index pushed above the 105-level mark

Global Rates: German bond yields fall as political risks and ECB rate cuts loom

MYR Bonds: Strong bidding interest for MGS 04/39 auction aided the local govvies

USD/MYR: The ringgit weakened slightly post US-election and slightly above to 4.40-level

Macro News

Malaysia: Construction activity in Malaysia surged by 22.9% y/y in 3Q2024, advancing from a 20.2% increase in 2Q and marking the tenth straight period of growth. This was the strongest expansion since 3Q2022, driven by a significant uptick in output for both residential (27.8% y/y vs. 19.7% in Q2) and non-residential (27.7% y/y vs. 7.2%) buildings.

Fixed Income

Global Bonds: The US bond market was closed on Monday but over in the German bond market we saw yields coming down. Demand for Germany's Bunds remained as risks to its political situation persist and as the ECB is expected to cut further amid growth weakness.

MYR Government Bonds: The Ringgit government bond market was aided by strong bidding interest for the MGS 04/39 auction where the final BTC stood at 2.672x. However, we did see some sell down in the afternoon session mainly due to some profit taking after the market gains in the previous 2-3 days.

MYR Corporate Bonds: The Malaysian corporate bond market remained mixed with flows seen mainly on AA rated names. We think most investors remain sidelined while awaiting a better picture in the sovereign bond market trading before taking up more positions in the PDS segment. Flows were led by AA- rated Johor Port 10/29 which rose 14 bps to 4.00% on MYR40 million volume while we noted AA3 Gamuda 06/30 up 4 bps to close at 4.01%.

Forex

US: Global market sentiment remains driven by the Trump trade, with dollar buying pushing the DXY index above the 105 level - a mark last reached when the Fed's Federal Funds Rate was at multi-decade highs, reflecting the peak of its tightening cycle. Traders will keep a close eye on upcoming inflation and retail sales data this week, though it would take a significant deviation from market expectations to shift the current Trump trade narrative.

Europe: Both the EUR and GBP were off to a weak start, pressured by the strong dollar narrative and amidst lack of data driven flow. Up and about this week is the 2nd estimate for the 3Q2024 Eurozone GDP which will provide further clues if the region is still struggling with growth. We also await jobs-related data in the UK to see if wage growth remains low, which is a welcome news for UK policy doves.

Asia Pacific: The Japanese yen also declined during the day. In the morning, the summary of opinions from the BoJ October policy meeting indicated that members were uncertain about the timing of a rate hike due to political uncertainties. And the Trump trade pressured the USD/CNY pair to reach its highest since August 2024, as China is deemed as the most affected country by the tariff policy. Data showed that China's economy continues to struggle with structural issues as outstanding loan growth fell to the lowest on record, and inflation prints over the weekend contracted more on m/m basis compared to what market was looking at.

Malaysia: The ringgit weakened slightly to close around its post-US election high and slightly above the 4.40-level. Ahead of this Friday's final estimate of 3Q2024 GDP, we foresee a slightly slower growth of 5.1% y/y, down from the advanced estimate of 5.3%, due to the moderation in services sector due to, we believe, lack of festive season spending. Be that as it may, growth in the manufacturing sector accelerated during the quarter.

Other Markets

Gold: Gold dropped to its lowest level in nearly two months on Monday as the dollar continued to strengthen following Trump's victory in the US presidential election.

Oil: Brent and WTI ended significantly lower for the second consecutive session early on Monday, as China reported ongoing economic struggles despite new stimulus measures introduced last week, while the dollar maintained its post-election rally.

Source: AmInvest Research - 12 Nov 2024