Snapshot Summary

Global FX: USD steady near its highest level since mid-August

Global Rates: UST mixed ahead of the FOMC minutes release and US CPI this week

MYR Bonds: Bonds received support after recent losses

USD/MYR: Ringgit hovers near its lowest level since mid-September

Macro News

Australia: Australia's Westpac-Melbourne Institute Consumer Sentiment index surged by 6.2% m/m to 89.8 in October, the highest level in 2.5 years. This increase contrasts with a 0.5% m/m decline the previous month, influenced by interest rate cuts overseas and encouraging signs of easing domestic inflation. Consumers' perceptions of economic conditions over the next year rose by 14.3% to 92.8, while their outlook for the next five years increased by 8.0% to 97.8.

Germany: Industrial production surpassed expectations to register rise of 2.9% m/m in August, against consensus of +0.8% m/m. However, prior month's figure was revised down to -2.9% m/m from -2.4% m/m previous estimate. On y/y basis, industrial production remained negative, registering -2.7% y/y but better than -3.8% consensus and July's -5.6%.

US: The NFIB Small Business Optimism Index in the US rose to 91.5 in September 2024, up from 91.2 in August, but fell short of the expected 92.0.

The US trade deficit fell to USD70.4 billion in August, the lowest in five months, down from an upward revised USD78.9 billion in July. Exports rose by 2% m/m to a record USD271.8 billion, while imports fell by 0.9% m/m to USD342.2 billion, primarily due to declines in non-monetary gold, finished metal shapes, crude oil, and passenger cars, although service imports, including travel and intellectual property fees, increased.

Fixed Income

Global Bonds: US Treasuries closed mixed overnight as some slipping in shorter dated yields were noted. However, 2Y and 10Y yields remained to hover near the 4.00% level. The market was seen holding ahead of the FOMC meeting minutes release and print of the US CPI data this week. The 3Y note auction garnered BTC of 2.45x which is the lowest since June this year.

MYR Government Bonds: Government bonds received support after recent days of losses. Yields were seen lower on the front and bellies of the curve as the longer part of the curve was seen cautious before the US CPI release later this week. IRS rates were also lower while the MYR closed below the 4.300 level though continued to weaken yesterday.

MYR Corporate Bonds: Ringgit corporate bonds were seen mixed on relatively lighter volume yesterday as sentiment remained cautious. Higher rated AAA names led the flows as yields moved sideways. AAA rated PLUS 01/33 rose 3 bps to 3.91%, while PASB (AAA) ended 6 bps higher at 3.88%. Along the GGs, Prasarana 09/29 rose 4 bps to close at 3.65% and LPPSA 08/38 rose 4 bps to 4.00%.

Forex

US: On Tuesday, the dollar index held steady around 102.55, remaining near its highest point since mid-August, as traders reassessed expectations of rate cut pace by the Fed. The dollar strength was supported by a rise in UST yields, with the 10Y benchmark this week above 4% for the first time since early August. Mixed tone by Fed officials were non directional for the dollar. Atlanta Fed President Bostic said now there is risk that the economy is too strong, and could hamper policy recalibration, while Boston Fed's Collins said further adjustments of policy will likely be needed.

Europe: On Tuesday, the EUR reversed its early gains and edged slightly lower. This came after dovish comments from ECB Executive Board member Elderson and Governing Council member Nagel, who both signalled support for continued interest rate cuts by the ECB. However, losses in the euro were tempered by positive economic news from Germany, where August industrial production saw its strongest monthly rise in nearly three years.

Asia Pacific: The yen initially made gains but later reversed course and moved lower. Japan's September Eco Watchers Outlook Survey unexpectedly declined, weighing on the currency. However, the yen's losses were limited after Japan's labour cash earnings came in stronger than expected, which could signal a more hawkish stance from the BoJ. China's yuan fell to its lowest in nearly three weeks on Tuesday as mainland markets reopened following a week-long holiday. The currency was pressured by the USD broad strength. Additionally, the yuan also weakened as the market was disappointed after the National Development and Reform Commission (NDRC) vowed to further support for growth to reach this year's target but yet indicated no immediate and additional stimulus measures.

Malaysia: The ringgit fell again and closed around 4.287 and remained at its weakest level since mid-September. This was in tandem with weaknesses in other Asian currencies as markets adjusted to their Fed rate cut bets and amidst the ongoing Middle-East geopolitical tensions.

Other Markets

Gold: Gold closed sharply lower on Tuesday, falling to a two-week low. The decline was driven by rising global government bond yields.

Oil: WTI crude oil saw a sharp decline on Tuesday as concerns over China's decision to forgo new stimulus measures to boost its slowing economy outweighed fears of an escalating conflict in the Middle East.

Source: AmInvest Research - 9 Oct 2024