Snapshot Summary

Global FX: The dollar was slightly changed amid the lack of trading volumes

Global Rates: Bund yields remained near recent lows on lessened inflation concerns

MYR Bonds: Local govvies was mixed though there was support on select benchmarks

USD/MYR: Ringgit remained pressured vis-à-vis a week ago

Macro News

South Korea: The Bank of Korea cut its base rate by 25 bps to 3.00% in its November meeting, marking the second consecutive month of rate cuts and surprising the market, which expected a pause. This decision lowered borrowing costs to their lowest point since October 2022, against a backdrop of slowing inflation, easing household debt, and weak economic output.

Germany: The flash German Harmonized Index of Consumer Prices (HICP) number remained low. The Federal Statistics Office of Germany indicated that the annual HICP rose by 2.4% in November. However, economists had expected the data to have registered at 2.6%.

Fixed Income

Global Bonds: German Bund yields remained near their two-week lows on signs of weak inflation ahead of the Eurozone inflation data to be released on Friday, after the German harmonized inflation gauge was released flat yesterday. Dovish comments from ECB's de Galhau additionally drove sentiment in the bond market. The UST market was closed for Thanksgiving's.

MYR Government Bonds: The Malaysian government bond trading was mixed yesterday overall but we noted that benchmark papers on the front and belly of the curve were supported. Seeing that UST yields were hovering lower on a weekly basis may have supported sentiment on local shores.

MYR Corporate Bonds: The ringgit corporate bond market saw support yesterday as well and we noticed select AAA and AA rated banking and infrastructure/utilities issuers were receiving bids. Heavier volume traded include AA1 rated YTL Corp 09/35 down 1 bps to close at 4.18% and YTL Corp 11/36 down 5 bps to 4.20%.

Forex

United States: The dollar edged slightly lower due thin trading volume amidst Thanksgiving holiday. The ICE DXY index closed slightly changed at 106.05.

Europe: The euro slipped 0.1% as the German harmonized inflation remained flat in November, contrary to forecasts of a rise, ahead of eurozone inflation data due Friday, which could influence the ECB's next steps. The currency was also pressured by dovish statement from ECB's Villeroy de Galhau, who signaled potential for growth-supportive rate cuts as inflation nears 2% and growth weakens. The GBP/USD pair was steady at around 1.269.

Asia Pacific: The JPY softened, giving back some of its sharp gains from the previous session, as markets estimate a 53% likelihood of a BoJ rate hike next month. China's yuan strengthened against the USD on Thursday as the dollar retreated from its recent rally, with market activity easing amidst the US Thanksgiving holiday. The PBoC set the midpoint rate at 7.1894 per dollar, the strongest since 11 November and 333 pips firmer than markets' projection. The AUD/USD found some supports as RBA Governor Michele Bullock reaffirmed that high core inflation rules out near-term rate cuts, aligning with expectations for easing in anytime soon.

Malaysia: The ringgit went down on Thursday, marking the third bearish trade over the past eight sessions. The currency continues to hold the crown as the outperforming currency in the region with 3.5% spot return, according to Bloomberg, from end-2023 up until 28 November.

Other Markets

Gold: Gold prices were seen higher overnight despite a firmer USD and steady US PCE inflation data earlier this week. However, trading was light amid the US holiday.

Oil: Oil trading was light amid closures in exchanges in the US. News that OPEC+ has delayed this weekend's scheduled meeting to decide on output cuts by about a month also contributed to the lack of interest. Overall, prices moved mixed.

Source: AmInvest Research - 29 Nov 2024