Snapshot Summary

Global FX: The dollar fell on suspected profit taking trades

Global Rates: US Treasury yields edged higher driven by strong Friday's data releases

MYR Bonds: Local govvies remained rangebound after Powell's hawkish comments

USD/MYR: Ringgit ended its four-day losing streak

Macro News

China: China's retail sales rose by 4.8% y/y in October, up from a 3.2% increase in September and surpassing the market consensus of 3.8%. This marked the fastest retail growth since February, fueled by a week-long holiday, a recent shopping festival, and a series of government support measures introduced in late September to boost demand.

Malaysia: Malaysia's GDP grew by 5.3% y/y in 3Q2024, matching the official advance estimate but slowing from the 5.9% expansion recorded in the previous quarter. The slowdown was largely driven by weaker growth in the services sector (5.2% y/y vs. 5.9% in Q2). However, both manufacturing (5.6% y/y vs. 4.7%) and construction (19.9% y/y vs. 17.3%) saw stronger growth. On the expenditure side, private consumption slowed (4.8% y/y vs. 6.0%), while government spending accelerated (4.9% y/y vs. 3.6%). Net exports slipped back into contraction as imports rose by 13.5% y/y while exports grew at a slower pace of 11.8% y/y.

UK: UK's GDP contracted 0.1% m/m in September, the first decline in five months, following a 0.2% rise in August and well below consensus expectation of a 0.2% growth. Production output shrank 0.5% m/m, reversing from a 0.5% gain in August, led by a 1.0% drop in manufacturing.

US: US export prices increased by 0.8% m/m in October, marking the largest rise since August 2023 and surprising market expectations. Meanwhile, import prices increased by 0.3% m/m, reversing the 0.4% drop in September and defying market expectations. This rise was mainly driven by a significant rebound in fuel prices, which jumped 1.5% m/m after falling 7.5% in September, due to higher wholesale market prices.

US retail sales rose by 0.4% m/m in October compared to the previous month, surpassing the market expectation of 0.3%.

Fixed Income

Global Bonds: Longer tenor US Treasuries saw yields edged higher last Friday though coming off daily highs. The day's weaker close came against the release of stronger than expected US retail sales data for the month of October and upwardly revised number for the month of September. The release of data showing unexpected rise in US import prices also pressured UST higher. The UST curve steepened after Friday's data releases.

MYR Government Bonds: The Malaysian government bond market remained rangebound last Friday, contributed by sustained high UST yields after hawkish Powell comments the day prior when he said there is no pressure to rush rate cuts amid current pace of employment and inflation.

MYR Corporate Bonds: Corporate bond trading remained weak and we noted a few AAA rated bonds posting losses. Clearly, trading remained subdued until investors sense there's better sentiment in the global bond markets. In any case, the AAA papers seeing some sell down last Friday include ALR 10/31 which rose 8 bps to 4.05% and PLUS 01/36 and 01/37 which realigned at 4.04% (-1 bps) and 4.02% respectively.

Forex

US: The dollar posted losses on Friday as it retraced some of the prior session's gains on suspected profit taking trades. Nonetheless, the DXY index chalked up the strongest week since last September due to the prevailing Trump trade and the Fed is seen to cut interest rates at a slower rate than initially thought of. Friday's retail sales (+0.4% m/m vs. cons. +0.3% m/m) and comments from Boston Fed's Susan Collins that the Fed rate cut pause could happen as soon as December meeting helped support the sentiment.

Europe: The euro gained, trading at 1.054, while the pound weakened by 0.4% to 1.262, following data that revealed an unexpected contraction in the UK economy for September and sluggish growth during 3Q2024.

Asia Pacific: The USD/JPY pared some the recent gains, falling 1.3% on Friday. The broadly in line 3Q2024 GDP growth in Japan may have partly supported the Japanese yen, aside from the weaker USD. In China, the CNY marked the fifth straight day of bearish trades out of seven days amidst concerns that Trump tariff policy would affect the CNY currency. losses on Friday were capped as the PBoC set a stronger-than-expected midpoint rate for USD/CNY at 7.1966 per dollar, 360 pips above market estimate, signaling official support to slow the currency's decline.

Malaysia: The ringgit ended its four-day losing streak, stabilizing just below the 4.47 mark on Friday. Malaysia's GDP data for the third quarter met expectations but indicated a slowdown from the 18-month high recorded in the previous quarter. On another note, Malaysia was removed from US currency manipulation watchlist, a move which was welcomed by the BNM which affirmed the ringgit's market-driven status.

Other Markets

Gold: Gold fell 0.1% to USD2,563/oz on Friday, marking their sixth consecutive loss and the longest losing streak since October 2023, which reflects a shift in sentiment due to a stronger USD and reduced expectations for Fed rate cuts.

Oil: Both the Brent and WTI fell as weak Chinese demand and a rise in U.S. inventories weighed on prices. Reports of declining Chinese refinery activity and warnings of a potential supply surplus next year by the EIA and IEA due to rising production and slowing demand further pressured the market.

Source: AmInvest Research - 18 Nov 2024