Snapshot Summary

Global FX: The DXY index reached its peak since May on rising treasury yields

Global Rates: US Treasury yields rose as concerns grow over potential Trump's inflation-stoking policies

MYR Bonds: The same Trump worries prompts weaker local govvies trading

USD/MYR: The ringgit dropped on Tuesday to close at circa 4.43-level

Macro News

Australia: The Westpac-Melbourne Institute Consumer Sentiment Index in Australia increased by 5.3% to 94.6 points in November, marking the second consecutive monthly rise and reaching its highest level in two and a half years.

Germany: The ZEW Indicator of Economic Sentiment for Germany dropped to 7.4, down from 13.1 in October and significantly below the forecasted 13. This decline was influenced by Donald Trump's election victory and the collapse of the German government coalition.

UK: The UK's unemployment rate rose to 4.3% in September, up from 4% in the previous three-month period and exceeding the anticipated 4.1%. This increase marks the highest rate since May, largely due to a rise in the number of individuals unemployed for up to six months.

US: the NFIB Business Optimism Index in the United States rose to 93.70 points in October, up from 91.50 points in the previous month.

Fixed Income

Global Bonds: US Treasury yields rose again overnight amid sustained worries that Trump's policies will reignite inflation, and this comes ahead of today's release of the October CPI data. US stock markets also fell after recent highs on the back of expectations of Trump's expansionary fiscal and deregulation policies. Richmond Fed president Barkin said the Fed is cognisant of the inflation risk. Minneapolis Fed's Kashkari said the policy is currently modestly restrictive, contributing to the yield rise.

MYR Government Bonds: The Ringgit government bond market returned to weaker trading yesterday, nudged by worries over incoming Trump inflationary policies. Benchmark papers were 1-3 bps higher on short to medium tenors.

MYR Corporate Bonds: Corporate bond trading saw a tad more support yesterday, though the overall close was still mixed amid the weak sentiment of the global bond market. Gains yesterday include AA1-rated Maybank subordinated sukuk 01/34, which fell 1 bps to 4.01%, and AA3-rated IJM 03/39, which fell 2 bps to 4.24%.

Forex

US: The ICE DXY dollar index peaked in May this year, driven by increasing Treasury yields as investors evaluated the economic outlook and inflation prospects under the Trump administration. Technically, as the Relative Strength Index (RSI) for the DXY almost touches the overbought threshold, the dollar is poised to experience moderate correction over the short-term period. The US October CPI data release later tonight will be the data traders are observing, with Bloomberg's consensus predicting a 0.3% increase in the month-on-month core figure.

Europe: The EUR/USD fell as much as 0.3% amidst the dollar's strength, Germany's political uncertainty and sour sentiment data. The ZEW Economic Sentiment for the Euro Area fell to 12.5, below the market forecast of 20.5. The euro was also pressured by a dovish speech by ECB Governing Council member Olli Rehn. The British pound was also on the downside as traders digested the unemployment rate (which picked up to 4.3%) and wage growth data (which slowed to 4.8%).

Asia Pacific: Asian currencies also closed in red, with the JPY falling 0.6% and CNY dropping 0.3%. In Japan, Japanese Prime Minister Shigeru Ishiba committed over $65 billion in new funding for the country's semiconductor and artificial intelligence sectors. Tokyo aims to stay competitive in the global race for advanced technology. For the yuan, downward pressure for the currency came from news flows reported that Trump's cabinet selections with pronounced anti-China stances have heightened worries about further deterioration in bilateral relations. In the meantime, the Aussie dollar fell 0.6% as well.

Malaysia: The ringgit dropped on Tuesday to close at circa 4.430-level amidst a firm dollar. Ringgit's direction continues to be dictated by external factors as the currency slowly grinds towards our next weekly resistance of the 4.480 level.

Other Markets

Gold: Gold fell to its lowest in over seven weeks as the dollar strengthened post-Trump's election, driven by his tax cut and trade tariff promises, making it more expensive to buy the precious metal.

Oil: Brent prices remained near November lows at around USD71 a barrel, as bearish fundamentals, signs of oversupply, OPEC's reduced demand growth forecasts, and a strong dollar capped gains.

Palm Oil: Prices were in range but pared down from recent two-year highs as data showed Malaysia's palm oil exports fell by 16% in the first 10 days in November vis-à-vis the same period in October.

Source: AmInvest Research - 13 Nov 2024