MGS/GII yields to exhibit a modest rise amid US economic resilience
Malaysian Government Securities (MGS) and Government Investment Issues (GII)
- MGS and GII yields displayed mixed movements this week, ranging from by -0.8 bps to 3.1 bps overall. The 10-year MGS rose by 2.7 bps to 3.723%, while the 10-year GII increased at lower pace of 1.4bps to 3.754%.
- Domestically, August’s lower-than-expected CPI of 1.9% triggered RM1.0b inflows into Malaysia's debt market on September 24th. This influx coupled with the Fed’s 50bps rate cut last week lowered local yields and contributed significantly to the ringgit’s appreciation. Meanwhile, China’s surprise monetary stimulus added downward pressure on yields, although we are now observing a gradual increase in the yields of 10-year MGS. This increase in driven by strong US economic data, especially from a stronger labour market with declining jobless claims and improving business activity.
- We expect a moderate rise in local yields, driven by expectations of continued strong US economic performance, indicated by upcoming JOLTS data and job openings. Domestically, we foresee positive momentum in the manufacturing sector, supported by stable PMI data due next week.
Download Full Content:
