Snapshot Summary

Global FX: Dollar traded bearishly on Thursday following higher than expected jobless claims

Global Rates: UST trading on Thursday was mixed as traders await the November US NFP report

MYR Bonds: Malaysian government bonds remained supported with gains seen in 3Y MGS and GII

USD/MYR: Ringgit strengthened further amidst gains in Asian currencies and CNY against the dollar

Macro News

Eurozone: Eurozone's retail sales fell by 0.5% m/m in October, reversing the 0.5% increase seen in September and falling short of the expected 0.3% decline. Among the largest economies, Germany saw a 1.4% m/m decrease in retail sales, while sales remained flat in France and Spain.

US: The US trade deficit narrowed to USD73.8 billion in October from an upwardly revised USD83.8 billion in September. Exports decreased by 1.6% m/m, hitting their lowest level in four months. Meanwhile, imports fell 4% m/m.

US initial jobless claims increased to 224k for the week ending 30th November 2024, up from 213k the previous week and above market expectations of 215k. This was the highest level in six weeks.

Fixed Income

Global Bonds: UST yields remained near monthly lows but trading on Thursday was mixed as traders await the November US jobs report due on Friday. In any case, UST sentiment was supported after jobless claims data released this week showed a modest increase. Ahead of Friday's jobs data, markets reduced slightly the pricing of a Fed rate cut this month to 70% from 75% earlier this week.

MYR Government Bonds: Malaysian government bonds remained supported. We think encouraging supply outlook, ahead of the small issuance size of auction of the 10Y MGS reopening, and sustained low UST yields, were main drivers to the market yesterday. Gains were especially seen on the 3Y MGS and 3Y GII where flows totalled about MYR350 million to MYR400 million on each paper. And these gains also came amid continued firm MYR trading.

MYR Corporate Bonds: Ringgit corporate bonds closed mixed as more focus was on the net buying action in the govvies segment. Yesterday we saw that flows were led by toll road and water sector names though we suspect these were mainly due to profit taking activity after their price gains seen throughout this year and possibly independent of corporate level speculation such as any PLUS Berhad investment into a highway in

Penang and any change of ownership in Kesturi. Of these, AAA rated PLUS 01/33 rose 5 bps to 3.96% and AA- Kesturi rose 8 bps to 4.37%.

Forex

United States: The DXY fell 0.6% amid higher-than-expected jobless claims, with market focus shifting to Friday's nonfarm payrolls report, while bets on a Fed rate cut later this month remain steady at 70%. There was also some euro buying against the dollar during the day.

Europe: The euro rallied 0.7% as French bonds steadied following the slight political clarity and resolve as French President Emmanuel Macron met with allies and parliament leaders to expedite the appointment of a new prime minister after Michel Barnier resigned following a no-confidence vote. However, political instability in France and Germany weighs on eurozone prospects, with the currency still on track for weekly losses.

Asia Pacific: The Japanese yen rose as traders speculated on a potential Bank of Japan rate hike later this month, supported by dovish policymaker Toyoaki Nakamura's openness to rate increases. Meanwhile, the South Korean won eased slightly after the government announced a 40 trillion won market stabilization fund to calm markets following President Yoon Suk Yeol's brief martial law declaration. The Chinese yuan erased earlier losses amidst dollar weakness. The PBoC set the daily yuan fixing at 7.1879 vs. market estimate of 7.2664.

Malaysia: In tandem with the gains in the CNY, the MYR rose 0.6% to 4.427, its highest level in three weeks as the dollar traded weaker.

Other Markets

Gold: Gold prices dipped to below USD2,640/oz despite dollar losing ground as investors became cautious ahead of NFP data later tonight.

Oil: Crude oil fell with Brent falling 0.3% and WTI dipping 0.7% despite OPEC+ extending the phased return of 2.2 million bpd production cuts to September 2026, as rising US and Canadian output and weak Chinese demand are expected to outpace global oil needs by 2Q2025.

Source: AmInvest Research - 6 Dec 2024