Snapshot Summary

Global FX: Dollar was driven up by US S&P PMIs data and safe haven demand

Global Rates: US Treasuries closed mixed amid geopolitical risks and Fed rate concerns

MYR Bonds: Local govvies closed steady with benchmark yields in range

USD/MYR: Ringgit slipped 0.1% to close at 4.470 amidst tight trading range

Macro News

Malaysia: Malaysia's annual inflation rate rose to 1.9% in October, slightly higher than both market expectations and September's 1.8%. Core consumer prices increased by 1.8% y/y, holding steady for the second consecutive month and remaining at their softest pace in six months.

UK: Retail sales in the UK fell by 0.7% m/m in October, following a downwardly revised 0.1% increase in September. This was the largest decline in four months, with retailers across various industries citing low consumer confidence and uncertainty around the Budget announcement as factors affecting sales. The S&P Global UK Services PMI dropped to 50 in November from 52 in the previous month, falling short of market expectations. The unchanged level of business activity marked the third consecutive month of stagnation. Meanwhile, the S&P Global Flash UK Manufacturing PMI declined to 48.6 in November 2024 from 49.9 in October. This marked the first contraction in the manufacturing sector in seven months.

US: The University of Michigan consumer sentiment for the US was revised down to 71.8 in November from an initial 73, yet it remained the highest in seven months, up from 70.5 in October. The S&P Global US Composite PMI increased to 55.3 in November from 54.1 in October, indicating robust expansion in the private sector and marking the strongest growth since April 2022. However, this growth was uneven, with the service sector booming (PMI at 57 compared to 55 in October) while manufacturing continued to contract (PMI at 48.6 compared to 49.9).

Fixed Income

Global Bonds: US Treasuries closed mixed as safe-haven demand amid geopolitical risks intertwined with concerns that the Fed will be more patient before cutting rates further seeing the risks of inflation resurgence due to the Republican expected incoming fiscal and trade policies. Elsewhere, German yields fell to the lowest in a month, after news of weaker-than-expected PMI data and German GDP being revised downward.

MYR Government Bonds: The Malaysian government bond market closed steady with benchmark yields in range last Friday. There was a lack of fresh drivers but we noticed some bargain hunting interest on longer tenor papers for yield pickup.

MYR Corporate Bonds: Corporate bond trading saw mixed interest as yields moved sideways awaiting fresh guidance. Notable trades include MYR60 million volume done on AA+ rated UMW 11/25 at 3.63% (+2 bps) and MYR40 million done on AA3 rated AEON 04/29 at 4.02% (-5 bps).

Forex

United States: Some euro selling was seen against the dollar, alongside with strong US S&P manufacturing and services PMIs, and safe-haven bid amid escalating Russo-Ukrainian tensions. At the same time, markets are pricing in lower chances for December rate cuts at 56% vs. 62% a week ago.

Europe: The euro fell to the 1.042-level, its lowest since November 2022, as weaker-than-expected Eurozone PMI data, which showed contracting business activity in both services and manufacturing, pressured the currency. Bundesbank chief Joachim Nagel stated that weak German PMI data confirms the economy's stagnation this year and a challenging start to next year, adding that discussions on the next ECB rate cut are premature. The British pound extended its losses further amid disappointing UK retail sales, mixed PMI and a stronger dollar.

Asia Pacific: The JPY held steady around 154.78 as the currency was supported by safe haven bid and potential rate hike by the BoJ after the October's inflation rate remained above the 2.0%. On another note, Japanese Prime Minister Shigeru Ishiba's Cabinet approved a JPY21.9 trillion (USD140 billion) stimulus package focused on wage growth, household support, and economic investments. In China, the CNY fell to a 3.5-month low against the dollar on Friday, though losses were limited by the PBoC's stronger-than-expected midpoint fixing and commitment to maintaining currency stability.

Malaysia: The Malaysian ringgit slipped 0.1% to close at 4.470 amidst tight trading range and stronger dollar on Friday. The currency seemed shrugging off the uptick in October's inflation, beating market expectations of 1.8% y/y.

Other Markets

Gold: Gold rose for the fifth consecutive session on Friday, reaching USD2,716/oz, driven by safe-haven demand amid escalating Russia-Ukraine tensions and nuclear threats, despite a stronger dollar.

Oil: WTI crude rose to USD71.71 per barrel on Friday, while Brent crude reached USD75.17 per barrel, as escalating Russia-Ukraine tensions and nuclear threats added to the geopolitical risk premium.

Source: AmInvest Research - 25 Nov 2024