Snapshot Summary

Global FX: Dollar started the week on a firmer footing

Global Rates: The UST market closed slightly weaker with yields sustained near recent lows

MYR Bonds: Local govvies closed steady on month-end interest

USD/MYR: Ringgit slipped in tandem with other Asian currencies

Macro News

Malaysia: The S&P Global Malaysia Manufacturing PMI fell to 49.2 in November from 49.5 in the previous two months, the lowest level since June and marking the sixth consecutive month of contraction in the manufacturing sector.

Germany: The HCOB Germany Manufacturing PMI was adjusted slightly downward to 43 in November from a preliminary estimate of 43.2, matching the October figure. The data indicated that the manufacturing sector remained in contraction during the middle of Q4.

US: The ISM Manufacturing PMI for the US rose to 48.4 in November from 46.5 in October, surpassing forecasts of 47.5. This indicated a continued, albeit softer, contraction in the manufacturing sector. Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that demand remains weak as companies prepare for 2025, with production execution easing in November due to sluggish demand and weak backlogs.

Fixed Income

Global Bonds: The UST market closed slightly weaker, with yields sustained near recent lows. On the one hand, the release of strong ISM manufacturing numbers nudged market sentiments to be risk-on. On the other hand, the market was buoyed by comments from Federal Reserve Governor Christopher Waller, who said he is looking to cut the interest rate at this month's policy meeting slated for 17-18 December. Waller said the current rate remains restrictive.

MYR Government Bonds: Malaysian government bonds closed steadily yesterday, and we think some follow-up month-end interest supported sentiment. Notable flows were seen on some benchmark GII papers, such as the 7Y, which fell 1 bps to 3.75% on more than MYR600 million volume.

MYR Corporate Bonds: Ringgit corporate bonds closed sideways yesterday owing to a realignment on select issuers. For instance, on the AA1 segment, YTL Corp 06/34 shed 1 bps to close at 4.14%, while YTL Corp 09/35 closed unchanged at 4.18%.

Forex

United States: After posting weekly losses last week, the dollar started the week on a firmer footing following stronger-than-expected manufacturing PMI data. However, Fed Governor Christopher Waller stated he was "inclined" for a cut during the upcoming December meeting, which may have caped the dollar's gains. There was also some safe-haven bid after President-elect Trump threatened a 100% tariff on BRICS nations.

Europe: The euro tumbled 0.7% on Monday amid escalating political uncertainty in France, with the minority government facing a potential no-confidence motion over next year's budget, adding to the pressures pushing the euro toward its lowest level since November 2022. The British pound also went down 0.6% on the day.

Asia Pacific: The Japanese yen was steady at 149.60. Last Saturday, BoJ Governor Kazuo Ueda hinted at a possible December rate hike as economic data aligns with forecasts but emphasised the need to monitor US economic developments and underlying inflation trends. The Chinese yuan dropped sharply following Trump's warning to BRICS nations and reaffirmed plans for additional tariffs on Chinese goods. This is despite the midpoint daily fixing being set at 7.1865 per dollar, 519 pips firmer than the market estimate.

Malaysia: The Malaysian ringgit slipped alongside the weaker Asian currencies as investors traded cautiously ahead of key US labour market data this week and Trump's warning to BRICS members.

Other Markets

Gold: Gold fell as the dollar strengthened, with the price falling 0.2% to USD2,639/oz.

Oil: Crude oil was mixed as WTI crude edged up while Brent crude dipped on Monday, supported by strong Chinese factory data and Middle East tensions ahead of the OPEC+ meeting.

Source: AmInvest Research - 3 Dec 2024