Snapshot Summary

Global FX: Dollar index recovered from a 3.5 week-low on positive US economic data

Global Rates: UST yields fell as players outlined a signal for December rate cut from US November's labour data

MYR Bonds: Local govvies closed mixed amid hints of profit taking activity

USD/MYR: USD/MYR fell to its lowest level since early mid-November ahead of US print this week

Macro News

US: The eagerly awaited US jobs data unveiled that non-farm payrolls rose a slightly higher than expected 227k in November against +220k consensus expectation. The October NFP was revised higher to +36k from +12k. Average hourly earnings rose by 0.4% m/m in November, above 0.3% expectations but flat from 0.4% in October. Meanwhile, the US unemployment rate rose to 4.2% in November against 4.1% expectation and 4.1% in October.

The University of Michigan consumer sentiment index for the US increased for the fifth consecutive month to 74 in December 2024, the highest level since April.

Germany: German's IPI declined by 1% m/m in October, falling short of the anticipated 1.2% rebound and following a downwardly revised 2% decrease in September. This ongoing decline was primarily due to an 8.9% annual drop in energy production.

Fixed Income

Global Bonds: UST yields fell to a six-week low as players deemed the November payrolls data as a signal for a December rate cut by the Fed. The yield on the 10Y UST fell to as low as 4.126% and the 10Y/2Y spread widened to +5 bps from -7 bps before the NFP release. CME's FedWatch data showed probability of a December cut rose to 89% on Friday from 70% on Thursday.

MYR Government Bonds: Benchmark Malaysian government bonds closed mixed last Friday amid hints of profit taking activity. However, we still noted firm trading on the 10Y MGS amid its small MYR2 billion issuances size this month; the paper shed 1 bps to close at 3.77% on >MYR750 million volume.

MYR Corporate Bonds: Ringgit corporate bonds closed mixed again last Friday as risk appetite remained absent. Volume traded was also light and heavier trades include AA3 rated PKNS 01/32 which was steady at 4.19% (-1 bps) on MYR30 million volume and AA+ rated edotco Malaysia 09/29 which rose 9 bps to 3.91% on just MYR20 million flows.

Forex

United States: The dollar index gained on Friday, recovering from a 3.5-week low due to stronger-than-expected US consumer sentiment, hawkish Fed comments (Fed Governor Bowman and Cleveland Fed Hammack), and mixed labour data showing robust payroll growth and faster wage growth. But a higher unemployment rate, boosting the probability of a December rate cut to 85%.

Europe: The French-German bond yield spread fell to a two-week low Friday after President Macron announced plans to appoint a new prime minister to secure 2025 budget approval. Nonetheless, the euro eased 0.2% against stronger dollar despite the earlier relief over France's political instability. The British pound closed in red. With limited UK news and a steady BoE policy outlook, dollar dynamics dominate, keeping markets in a range until the upcoming US CPI report offers clearer direction.

Asia Pacific: The yen was relatively unchanged on Friday, supported by stronger-than-expected Japanese economic data on household spending and real cash earnings, along with falling US Treasury yields. China's onshore yuan edged lower against the dollar, and set 10th consecutive weekly loss, amid concerns over potential US tariffs under President-elect Trump straining the Chinese economy. The South Korean won tumbled Friday amid rumours of renewed fears of a second martial law, with the won initially plunging during the day, leaving it down 1.7% for the week as political turmoil under President Yoon weighed on sentiment.

Malaysia: Asian currencies were traded mixed with USD/MYR falling to its lowest level since early mid-November. We may see the ringgit erase some gains today as a reaction to robust US data last Friday and ahead of US inflation print this week.

Other Markets

Gold: Gold rose on Friday, gaining 0.1% to USD2,633/oz, as falling Treasury yields followed an unexpected uptick in the US November unemployment rate.

Oil: Brent and WTI fell following Saudi Arabia's crude oil price cuts for Asia and concerns arising due to the fall of Syria's regime.

Source: AmInvest Research - 9 Dec 2024