Snapshot Summary

Global FX: DXY index fell as geopolitical tensions eased

Global Rates: UST yields fell due to safe-haven bids

MYR Bonds: Local govvies rose following UST yields decline amid Ukraine-Russia crisis

USD/MYR: The ringgit strengthens amid weaker dollar

Macro News

Malaysia: Malaysia's exports grew by 1.6% y/y in October, slightly below the market forecast of 1.7%. This marks a recovery from a revised 0.6% decline in the previous month, indicating a pick up in foreign demand as the year progresses. Meanwhile, imports increased by 2.6% y/y, significantly down from the 10.9% growth in September. This marks the 12th consecutive month of growth in imports but represents the slowest pace since November 2023, reflecting subdued domestic demand.

Eurozone: Eurozone's annual inflation rate increased to 2% in October, up from 1.7% in September. The rise was largely anticipated due to base effects, as last year's significant drops in energy prices are no longer included in the annual rates. Meanwhile, the annual core inflation rate remained steady at 2.7%.

Fixed Income

Global Bonds: US Treasuries yields fell due to safe-haven bids upon news reports indicating Ukraine fired US-made missiles into Russian soil. Russia updated its war doctrine, which says an attack by any country that is supported by a nuclear power will be considered a joint attack on Russia.

MYR Government Bonds: The ringgit government bond market posted gains yesterday to follow a dip in UST yields during the European session. Buying into safe-haven UST was brought upon escalation in the Ukraine and Russia war and Russia updating its nuclear doctrine.

MYR Corporate Bonds: The corporate bonds market saw more papers being traded, though yields continued to rise. Sentiment for credits remained dampened despite the lower UST yields, which was instead due to geopolitical concerns and as markets were watching developments in Trump forming his next cabinet. Losses yesterday include AA-rated DRB Hicom 04/30, which rose 8 bps to 4.16% on MYR80 million volume, though DRB Hicom 12/29 was unchanged at 4.13% also on MYR80 million volume.

Forex

US: The dollar index (DXY) rose initially on Tuesday due to safe-haven bids due to concerns about escalating geopolitical tensions in Eastern Europe. But the index ended the day in the red as the concerns subsided and followed the lower UST yields. The weaker US housing data may have also partly subdued the dollar, along with reduced liquidity demand amid a stock market recovery.

Europe: The euro and pound were rangebound as traders focused on central bankers' speeches. ECB's Fabio Panetta suggested cutting interest rates to support economic growth and providing clearer guidance as post-pandemic shocks fade and inflation stabilises. The BoE officials highlighted tax increases as a key uncertainty for inflation, with Governor Bailey emphasising a gradual approach to rate cuts.

Asia Pacific: The JPY closed unchanged with the prior session, around 154.66. Meanwhile, traders are anticipating the PBoC to set both the 1Y and 5Y loan prime rates unchanged at 3.10% and 3.60%, respectively, as prior rate cuts may strain banks and put more pressure on the yuan. At the same time, recent stimulus measures have been announced to revive economic growth and meet government targets. On Tuesday, the onshore yuan weakened again and continued to be traded above 7.20 per dollar.

Malaysia: The Malaysian ringgit gained on a weaker dollar and is within the consolidation range, just below the 4.50 level. External trade data by DoSM was mixed, with exports rising only by 1.6%, compared with market expectations of 1.7%.

Other Markets

Gold: Gold continued its rebound, driven by safe-haven demand amid geopolitical tensions between Ukraine and Russia.

Oil: Crude oil closed higher as production resumed at Norway's Johan Sverdrup oilfield after a power outage. At the same time, geopolitical tensions rose over the US, allowing Ukraine to target Russia with US-supplied missiles.

Source: AmInvest Research - 20 Nov 2024