MGS and GII yields exhibited mixed movements this week, moving between -3.3 bps to 0.5 bps overall. The 10-year MGS remained steady at 3.772% while the10-year GII saw a marginal decline of 0.1 bps, settling at 3.781%.
A stronger-than-expected export figure, coupled with the Prime Minister’s reaffirmation of Malaysia’s intention to join BRICS and the enhancement of trade ties with India through the comprehensive strategic partnership have bolstered Malaysia’s attractiveness to foreign investors. However, lingering US economic uncertainty has led investors to favour shorter-term bonds, as evidenced by falling yields on 3- to 7-year MGS, while yields on 15- to 30-year MGS have risen.
Looking ahead, Kenanga said it expects local yields to trend downward next week, driven by rising expectations of a US Fed rate cut next month. This outlook will likely be influenced by further weakening in the US labour market and easing core PCE prices. Attention will be on Jackson Hole Economic Symposium, where dovish signals from Fed Chair Powell could boost demand for Malaysia’s liquid assets, particularly government bonds.
