Markets, Budget And GE15

MGS market traded mixed with yields slightly lower in 5y7y while other parts of the curve were 9-19bp higher week on week. The inaugural 15 year sustainability GII auction drew strong demand. 3M KLIBOR rose 3bp to 3.06%, but MYR IRS saw strong receiving appetite and we understand there was foreign receiving interest in 5y IRS which fell from a high of >4.30% in the early part of the week to close lower at 4.03%

Following the UMNO Supreme Council meeting, it was reported that a decision was made for parliament to be dissolved soon to hold the General Election this year, and PM Ismail Sabri may seek an audience with King to propose a dissolution date. Parliament will reconvene today and Budget 2023 will be tabled this Friday. GE15 may be held as early as in the second week of November if the parliament is dissolved soon after the Budget.

Election campaigns could coincide with the next MPC meeting on 3 Nov which Maybank Investment thinks will increase the chances of a pause by BNM on rate hikes. Historically, there wasn’t a period where the General Election came right in the middle of a BNM OPR normalisation cycle as OPR was already at about a neutral rate in the past three General Elections: GE12 (Mar 2008) OPR at 3.50%, GE13 (May 2013) OPR at 3.00%, GE14 (May 2018) OPR at 3.25%.

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