MGS and GII yields mostly increased this week, moving between -1.7 bps to 5.0 bps overall. The 10Y MGS yield rose
by 5.0 bps to 4.087%, whilst the 3Y GII fell to 3.646%. As expected, local bond yields trended rangebound-to-higher amid the shorter working week and as catalysts remained thin ahead of the New Year.
Malaysia’s headline inflation for November remained unchanged and within expectations (4.0%; Oct: 4.0%), although core inflation reached a new peak of 4.2%.
Kenanga belives the domestic yields may trend rangebound-to-lower next week, taking cues from a potential decline in US bond yields amid the New Year. Foreign demand for Malaysian bonds will likely remain mildly pressured in the near term as global risk sentiment stays tepid. Risk-aversion may linger amid concerns over the global economic outlook in 2023, and we do not expect sustained relief until after most major central banks complete their tightening cycles perhaps by 2Q23
