Snapshot Summary

Global FX: Dollar index trimmed earlier losses driven by JOLTS data

Global Rates: UST market closed slightly weaker overnight

MYR Bonds: Ringgit corporate bonds were still in mixed mode

USD/MYR: Ringgit weakened 0.2% as the dollar was buoyant during Asia session

Macro News

US: US JOLTS job openings increased by 372,000 to 7.744 million in October from a downwardly revised 7.372 million in September, surpassing market expectations of 7.48 million.

South Korea: President Yoon Suk-yeol has declared martial law-first time in more than four decades in response to escalating protests and civil unrest. The decision comes amid growing public dissatisfaction with the government's handling of economic issues and corruption scandals. The martial law declaration grants the military broad powers to maintain order and restricts certain civil liberties, including freedom of assembly and movement. The won partially recovered after Yoon lifted the decree following unanimous parliamentary opposition, including from his party.

Fixed Income

Global Bonds: The UST market closed slightly weaker overnight. The JOLTS data drove US job openings, which opened up moderately in October by 7.74 million vs 7.48 million forecast and higher than in September (7.37 million), while layoffs fell by 169k to 1.63 million. Elsewhere, there was demand for the safe-haven UST amid the short-lived martial law in South Korea, and its government yield fell to a two-year low.

MYR Government Bonds: Malaysian government bonds closed steadily and within a tight range yesterday. Following the prior day's heavy volume on the 7Y GII, yesterday we saw the 7Y MGS benchmark down 1 bps to close at 3.73% on volume traded about MYR380 million. Yesterday's onshore bond support came partly from UST strength during the Asian session.

MYR Corporate Bonds: Ringgit corporate bonds were still in mixed mode. There was demand for some banking names, but we also noted mixed flows on other issuers as yields on some of their tranches were realigned. Notable trades include AAA-rated Amanat Lebuhraya 10/30, down 2 bps to 3.98%, Amanat Lebuhraya 10/31, down 1 bps to 4.03% and its 10/32 tranche, up 1 bps to 4.09%.

Forex

United States: The US dollar index trimmed earlier losses as the JOLTS report showed a rise in job openings to 7.74 million by October's end, compared with 7.48 million consensuses. Fed officials noted progress toward the 2% inflation target but remained non-committal on rate decisions with mixed tone. Chicago Fed Goolsbee stated rates will come down a 'fair amount' next year, while San Francisco Fed Daly said a December rate cut would leave policy at the restrictive level. The FFR futures priced a 70% chance of a 25bps cut this month.

Europe: The euro posted marginal gains amidst France's political turmoil as the current government faces a confidence vote as soon as today following PM Barnier's force through an austerity budget bypassing parliament. The British pound held steady at around 1.267.

Asia Pacific: The South Korean won plunged to a two-year low against the US dollar after President Yoon declared martial law in a surprise late-night address, citing threats to liberal democracy. Meanwhile, the heightened geopolitical instability sent the USD/JPY pair lower but later reversed its losses after healthier-than-expected US job openings data. The Chinese yuan hit a 13-month low, nearing 7.3 per dollar, amid tariff concerns, weak economic data, and record-low Chinese bond yields, exacerbated by anticipation of U.S. policy shifts under President-elect Trump. Meanwhile, China's central bank governor, Pan Gongsheng, reaffirmed plans for an accommodative monetary policy in 2025, pledging counter-cyclical measures, ample liquidity, and lower borrowing costs to support growth amid challenges from a potential US trade war.

Malaysia: The ringgit weakened 0.2% on Tuesday as the dollar was buoyant during the Asia session. The weaker move was in tandem with the fall in CNY as the USD/CNY opened sharply higher over the past two days.

Other Markets

Gold: Gold rose on Tuesday, gaining 0.4% to reach USD2,643/oz, as the dollar weakened. The metal has remained rangebound since retreating from its October 30 record high of circa USD2,800/oz.

Oil: Crude oil rose driven by expectations that OPEC+ will delay restoring 2.2 million barrels per day of production cuts until April, alleviating oversupply concerns. OPEC+ is set to meet Thursday to decide on the plan, with newsflows suggesting a postponement as weak demand from China keeps prices steady.

Palm Oil: Malaysian palm oil futures rose on Tuesday, driven by worries over supply disruptions caused by floods in peninsular Malaysia and a rise in Indonesia's export tax and levy for December.

Source: AmInvest Research - 4 Dec 2024