Snapshot Summary

Global FX: Dollar continued its bullish run ahead of NFP data on Friday

Global Rates: UST yields closed in its highest level since last April

MYR Bonds: Local govvies remained supported despite high UST yields

USD/MYR: Ringgit fell by 0.3% as dollar strengthens

Macro News

US: US ADP employment added 122,000 workers to their payrolls in December 2024, the lowest in four months, down from 146,000 in November and below the forecast of 140,000. Meanwhile, US initial jobless claims dropped by 10,000 in the week ending January 4, from the previous week to 201,000. This marked the lowest level in eleven months and defying expectations of a rise to 218,000.

Fixed Income

Global Bonds: US Treasury yields continue to rise with levels now near their highest since last April. Bonds were negatively affected on news Trump may declare a national economic emergency to implement universal tariffs on various countries - on US allies and adversaries alike. Minutes of the December FOMC meeting suggesting policymakers are biased towards slowing the pace of interest rate cuts added to the bond market selling action. The 10Y UST closed near 3.70% overnight.

MYR Government Bonds: The local government bond market was supported as we note local players remained adding to their portfolios at the start of the year. This was despite UST yields seen well above 4.60% during the Asian session yesterday. Gains on benchmark papers was notable on the 5Y MGS which fell 2 bps to 3.59%.

MYR Corporate Bonds: The local corporate bond market was mixed yesterday whilst focus onshore we think was more focused on the govvies trading. Notable trades yesterday include AAA rated long end Tenaga 06/47 which was unchanged at 4.20% and Tenaga 08/38 which closed 1 bps lower at 4.04%. Along the GGs, Danainfra 10/36 closed 7 bps lower at 3.95%.

Forex

US: The dollar kept its bullish tone for a second session, with UST 10Y yield touching more than eight months high at 4.69% on headlines that Trump may declare a national economic emergency to implement universal tariffs. Despite the disappointing ADP release, jobless claims beat estimates and traders digested Fed Governor Christopher Waller and FOMC's December meeting minutes both of which confirmed that the Fed could slow their easing pace this year, sending the DXY up 0.5%. Still, the market remained focus on payroll data this Friday.

Europe: The euro was down 0.2% as the dollar firmed, alongside with Germany's data released yesterday was not really in favour for the common currency. Germany's factory orders shrank 5.4% m/m for November, compared with consensus of flat reading, suggesting the prolonged drag on manufacturing sector. At the same time, the GBP also tanked 0.9% as the 10Y Gilt yield surged to its highest since 2008.

Asia Pacific: The USD/JPY climbed 0.2% to 158.35, inching closer to the key 160 line that previously spurred BoJ intervention. Meanwhile, weak consumer sentiment data undercuts the central bank's confidence in household spending, throwing fresh doubt on any further rate hikes. The yuan remained hovering near 16-month lows versus the greenback, kept down by strong US data and lingering tariff uncertainty, even as the PBoC continued to fix the daily reference rate stronger than market estimates.

Malaysia: As Asian currencies were pressured by USD strength, ringgit pared prior session's gains and fell 0.3% on the day. The ringgit may remain vulnerable today following last night's fresh new concerns on impending Trump's tariff, and especially so if the non-farm payroll this Friday would show another strength in the labour market.

Other Markets

Gold: Gold trimmed gains after the Fed minutes highlighted cautious rate cutting moving forward. The price gained 0.5% to USD2,662/oz on the day.

Oil: WTI dipped 1.3% while Brent was steady as overall sentiment tilted towards the downside following latest FOMC minutes and Fed officials signalling of potential slower rate cut.

Source: AmInvest Research - 9 Jan 2025