Snapshot Summary

Global FX: The dollar softened on mixed US labour market data

Global Rates: UST market closed in a narrow range from the day prior

MYR Bonds: Lack of flows in the ringgit government bond market

USD/MYR: The MYR gained 0.4% on Thursday

Macro News

US: US initial jobless claims fell by 1,000 from the previous week to 219,000, contrary to market expectations of an increase to 224,000. This was the lowest figure since the near seven-month low of 213,000 recorded a month earlier, indicating a persistently tight US labour market as the year draws to a close.

Fixed Income

Global Bonds: The US Treasury market closed in a narrow range amid a thin holiday trade. Yields initially rose on the back of a smaller-than-expected number in weekly jobless claims. However, yields then fell after the 7Y notes auction received steady demand. The auction at size of USD44 billion garnered BTC of 2.76x which is also the highest since 1Q2020. In secondary trading yesterday, the 10Y UST saw an intraday high of 4.64% before coming down to close near 4.59%.

MYR Government Bonds: The ringgit government bond market saw light trading with many participants away from their desks the day after Christmas. For instance, we noted there was no trades done on the benchmark 3Y MGS. Nevertheless, there was some nibbling on selected papers. The 7Y GII edged 1 bp lower to close at 3.77% on less than MYR50 million volume.

MYR Corporate Bonds: Trading interest in the PDS market was also muted yesterday with only a limited number of names being traded. Flows were led by AAA Johor Corp 06/27 which fell 18 bps to close at 3.97% and followed by AA1 rated Public Bank sub-notes 10nc05 07/34 which fell 2 bps to end at 3.96%.

Forex

US: The dollar softened as markets digested mixed US labour market data. US initial jobless claims unexpectedly declined but continuing jobless claims rose to its three-year high, signalling a weakening economic momentum. The fall in dollar also was in tandem with the retreat on UST yields.

Europe: The EUR rose but remained within the latest consolidation range level. There was no pivotal data releases from Germany, but still elevated unemployment benefit claims from France may suggest the labour market has significantly cooled down. Meanwhile, the GBP closed lower but the trading range was thin.

Asia Pacific: The USD/JPY currently trading at its highest since last July, pressured by the BoJ's downplaying the possibility of rate hike soon. Meanwhile, the CNY settled near its 13-month low due to persistent economic concerns and a widening yield gap with the US. This is despite the PBoC setting the midpoint rate at 7.1897 per dollar, slightly lower compared with market estimates of 7.2995, signalling efforts to stabilize the currency.

Malaysia: Despite the lower Asian currencies, ringgit gained 0.4%, detaching itself from the weaker sentiment seen on CNY.

Other Markets

Gold: Gold took advantage of the retreating USD amid mixed US jobs data as it rose by 1.5% on Thursday.

Oil: WTI dropped by 0.4% on concerns over lower demand from China in 2025, while Brent rose 0.5% due to concerns over potential tighter US sanctions against Iran.

Source: AmInvest Research - 27 Dec 2024