KUALA LUMPUR (Sept 23): In a rare occurence, the trade value of the seven-year Malaysian Government Securities (MGS) spiked to RM1.5 billion on Thursday (Sept 22), from RM32 million a day earlier, Bank Negara Malaysia's (BNM) latest update showed, as the bond's trading yield jumped 15 basis points (bps) as global markets took their cue from higher US interest rate prospects to fight inflation, and as investors evaluated the possibility of an escalation of the Russia-Ukraine war.

Investors on Thursday sold MGS after the US announcement on Wednesday of a 75 bps hike in interest rates to between 3% and 3.25%, and following news that Russia President Vladimir Putin on Wednesday ordered Russia's first military mobilisation since World War Two and backed a plan to annex swathes of Ukraine, which Russia had invaded since Feb 24.

Such sentiments led to depreciation of world currencies, including the ringgit, against a strengthening US dollar, which saw higher demand from investors seeking higher returns from US interest rate hikes and as they sought safety in the greenback, which is deemed a haven in times of geopolitical uncertainties.

According to BNM, the seven-year MGS, which matures in April 2029 and pays an annual coupon rate of 4.504%, saw its trading yield closed up 15 bps at 4.22% on Thursday, after reaching an intraday low of 4.2% and high of 4.28%.