Snapshot Summary

Global FX: The dollar steadied after Trump's tariff pledge on Canada, Mexico and China

Global Rates: US Treasuries trading saw shorter tenor yields down slightly after release of the FOMC meeting minutes

MYR Bonds: The MGS market was in a narrow range awaiting more catalysts

USD/MYR: Ringgit erased early session losses to close at 4.458

Macro News

UK: The CBI Distributive Trades Survey showed that retail sales volumes in the UK plunged by 18% in November, worsening from a 6% decline in October and exceeding the anticipated 14% drop.

US: Richmond Fed Manufacturing Index remained steady at -14 in November 2024, unchanged from October and below the expected -10. This indicates that manufacturing activity remained sluggish, although there was increased optimism among businesses about improvements in the next six months.

US new home sales dropped by 17.3% m/m in October, falling well below market expectations of 730k. This was the lowest sales figure since October 2022, with two hurricanes significantly impacting activity in the South and ongoing affordability challenges for buyers.

Fixed Income

Global Bonds: US Treasuries trading saw shorter tenor yields down slightly after the FOMC meeting minutes showed policymakers discussing the trajectory of rate cuts. However, they mainly agreed that policy easing would continue, though at a gradual pace. Meanwhile, longer tenor yields rose slightly as traders reacted to Trump's comments on increased tariffs on goods from China and from Mexico and Canada. Bund yields remained near recent lows, as the EU's macro outlook remains murky amid slow economic activity and political risks in Germany as well threat of the Trump tariffs.

MYR Government Bonds: The Malaysian government bond market closed mixed in a narrow range despite noting that UST yields were lower during the Asian trading session yesterday. We think players were still nervous ahead of more market catalysts, including US data, especially the October employment numbers and the FOMC minutes. In our opinion, this led to hints of profit-taking activity, especially on longer tenors.

MYR Corporate Bonds: More trading flows were reported in the ringgit corporate bond yesterday, but the action was dominated by net selling activity. Notable trades include short-dated Danum 06/25 (AAA), which rose 2 bps to close at 3.53% on MYR55 million volume, and AA+ rated UMW 11/26, which closed 2 bps higher at 3.78% on MYR40 million volume. Along the GG segment, we saw Prasarana, 11/28, traded 10 bps higher to close at 3.70%.

Forex

United States: The ICE DXY Index swung from as high as 107.5 to as low as 106.5 before closing at 107.01, nearing the more than one-year low it reached a few sessions ago. This is after President-elect Donald Trump pledges to impose tariffs on products from Canada, Mexico, and China, which caused their currencies to weaken against the US dollar and ahead of the US Thanksgiving Holiday. On the monetary policy front, the FOMC meeting minutes aligned with Fed Chair Powell's comments, indicating another rate cut is likely in December, similar to November, if the economy and inflation stay on track.

Europe: The EUR closed in the red with marginal losses amidst heightened volatility, while the GBP/USD closed near its opening price. According to the Confederation of British Industry (CBI), UK retail sales volumes fell 18% in November, exceeding expectations, alongside declining confidence, reduced investment plans, further job cuts, and easing selling price inflation.

Asia Pacific: The Japanese yen firmed on safe-haven demand amidst volatility from tariff fear by Trump's policy. The Chinese yuan took a hit from Trump's new announcement on potential further tariffs on Chinese imports. Nonetheless, the PBoC continue to fix the daily yuan fixing below 7.20-level per dollar, signifying the central bank's effort in preventing yuan from free falling.

Malaysia: The trading range for ringgit was subdued, erasing early session's losses to close at 4.458. This is amidst weaker-performing Asia currencies as well.

Other Markets

Gold: Gold steadily steadied at around USD 2,633/oz after declining in an earlier session driven by Trump's tariff threat on Canada, Mexico and China.

Oil: Crude oil fell as geopolitical tension in the Middle East subsided after news of the cease-fire agreement between Israel and Hezbollah.

Source: AmInvest Research - 27 Nov 2024