Snapshot Summary

Global FX: USD kicked off 2025 on very firm footing amid expectations of strong US economic performance this year

Global Rates: UST yield fell but we think owed mainly to bargain hunting interest

MYR Bonds: Lower UST yields supported the MGS market yesterday

USD/MYR: MYR fell at the start of the year while Malaysia's manufacturing sector PMI number fell to its lowest since last March

FX Daily Rates Last Close Percent

DXY 109.39 0.8

EUR/USD 1.027 (0.9)

AUD/USD 0.620 0.3

GBP/USD 1.238 (1.1)

USD/JPY 157.50 0.2

USD/MYR 4.478 0.1

USD/IDR 16,195 0.6

USD/THB 34.28 0.5

USD/SGD 1.371 0.3

USD/CNY 7.299 0.0

MYR Cross Rates Last Close Percent

EUR/MYR 4.636 0.1

GBP/MYR 5.590 (0.1)

AUD/MYR 2.785 0.6

JPY/MYR 2.843 (0.1)

SGD/MYR 3.288 0.4

10CNY/MYR 6.135 0.1

100IDR/MYR 2.765 (0.3)

THB/MYR 13.068 0.2

MGS Bond Yields (%)

Last Close Bps

3-Year (05/27) 3.47 (1)

5-Year (08/29) 3.61 (1)

7-Year (04/31) 3.77 (0)

10-Year (07/34) 3.82 1

15-Year (04/39) 3.96 (1)

20-Year (05/44) 4.05 (1)

30-Year (03/53) 4.18 (0)

MYR Swap Rates (%) Last Close Bps

IRS 1-Year 3.57 (0)

IRS 3-Year 3.50 0

IRS 5-Year 3.53 (2)

IRS 7-Year 3.61 (2)

IRS 10-Year 3.70 (3)

3-Month KLIBOR 3.73 0

Major Sovereign Yields (%) Last Close Bps

UST 2Y 4.24 (0)

UST 10Y 4.56 (1)

Germany 10Y 2.38 1

UK 10Y 4.60 3

Japan 10Y 1.10 0

Australia 10Y 4.43 7

China 10Y 1.62 (5)

Korea 10Y 2.74 (13)

Indonesia 10Y 7.00 0

Thailand 10Y 2.27 1

Macro News

Malaysia: The S&P Global Malaysia Manufacturing PMI dropped to 48.6 in December from 49.2 in November, marking its lowest level since March and the seventh consecutive month of contraction in the manufacturing sector.

UK: The S&P Global Flash UK Manufacturing PMI dropped to 47 in December from 48 in the previous month, lower than the preliminary estimate of 47.3 and significantly below initial market expectations of 48.2. This marked the fastest contraction in UK manufacturing activity in 11 months, driven by a second consecutive period of reduced factory output and a faster decline in new orders.

US: The S&P Global US Manufacturing PMI declined to 49.4 in December from 49.7 in November, revised up from the preliminary estimate of 48.3 but still below expectations of 49.8. This extended the contraction in factory activity for the sixth consecutive month, contrasting with the resilient services sector.

China: China's manufacturing sector expansion slowed in December as the Caixin manufacturing PMI index fell to a 50.5 reading from 51.5 in November. The number reflects falling export orders and lower local business optimism.

Singapore: GDP grew 4.3% y/y in 4Q2024, as per advance estimates released by the Ministry of Trade and Industry. The number beat the estimate of 3.8%, though slower than 5.4% growth recorded in 3Q2024. On q/q basis, the Singapore economy grew 0.1% against median expectations of a 0.8% contraction.

Fixed Income

Global Bonds: US Treasury yields fell slightly on the first day of trading for the year. However, we think the net buying interest owed to bargain hunting activity seeing the climb in yields during December 2024. We think short term risks to bonds remain ahead of the Trump presidency. US data yesterday which aided bonds was US initial jobless claims decreased by 9k from the previous week to 211k, significantly lower than the expected increase to 222k and marking the lowest level in eight months.

MYR Government Bonds: The ringgit government bond market kicked off the new year on firm footing and we think lower UST yield during the Asian session contributed to the better sentiment. Nonetheless, selling pressure was noted on the 7Y MGS (MGS 07/32) ahead of the first auction of the year, which is slated to become the new 7Y benchmark.

MYR Corporate Bonds: We found the ringgit corporate bond market also relatively supported yesterday. We think investors were keen to pick up various high grade AAA names as well as some lower rated papers as well. Nevertheless, some selling pressure on select names were also seen. Interest was led by papers such as Ait Selangor 10/31 (AAA) which fell 2 bps to 4.03% on MYR30 million volume., as well as YTL Power 08/39 (AA1) which fell 2 bps to 4.16%.

Forex

US: The dollar index surged to more than two-year high at the start of 2025, bolstered by expectations of strong US economic growth and prompted by lower initial jobless claims print last night and persistent expectations for lessened Fed rate cuts. At the same time, the final S&P Global Manufacturing PMI figure for December was revised higher to 49.4 from 48.3.

Europe: The euro plunged to its lowest since November 2022, as a technical sell-off momentum below USD1.03 accelerated and expectations of significant ECB rate cuts in 2025 remain a risk. ECB official Yannis Stournaras said he expect the central bank to cut policy rate to 2.0% by this fall from 3.0% currently. Sterling also declined sharply. The final UK S&P Global manufacturing PMI was revised lower to 47, suggesting not so bright growth prospects for the UK's manufacturing sector.

Asia Pacific: The yen weakened to near its five-month low as markets anticipate potential BoJ rate hikes this year and traders were cautious against intervention risks by the central bank. The CNY took a breath of relief from the bearish run it had recently, which pushed the currency closer to the key 7.30 psychological level. During his new year address, President Xi Jinping said that GDP would surpass CNY130 trillion in 2024, aligning with the government's growth target of around 5.0%.

Malaysia: The ringgit started off 2025 on weaker level, approaching 4.480 yesterday. Malaysia's manufacturing PMI fell to its lowest level since March, driven by subdued demand and the largest decline in output in a year.

Other Markets

Gold: Gold rallied as safe-haven demand surged on US monetary easing, record central bank buying, and geopolitical tensions.

Oil: Crude oil advanced further with Brent rising 1.7% and WTI +2.0% as latest American Petroleum Institute (API) report showed continuous trend of declining crude oil stockpile for six weeks straight.

Source: AmInvest Research - 3 Jan 2025