KUALA LUMPUR: Kenanga Investment Bank Bhd
expects Malaysian bond yields to rise slightly next week, driven by easing fears of the United States (US) recession.
In a note today, the investment bank attributed the anticipated uptick in yields to stronger-than-expected Industrial Production Index (IPI) data and stable employment figures.
Malaysia’s IPI grew by 5.0 per cent year-on-year in June 2024, marking six consecutive months of positive momentum, primarily driven by sustained growth in the manufacturing sector, according to the Department of Statistics Malaysia (DoSM).
"Our outlook will be further supported by the upcoming release of the second quarter 2024 gross domestic product, particularly if it exceeds DoSM’s estimates," Kenanga Investment said.
The bank noted that improvements in US economic data, including robust Institute for Supply Management (ISM) services figures and a decline in jobless claims, have led to higher local yields, indicating a modest shift in investor risk appetite.
"Nevertheless, the domestic bond market continues to attract inflows, with foreign investors purchasing RM1.9 billion worth of Malaysian debt this week," it added.
Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields showed mixed movements this week, ranging from -3.7 basis points (bps) to 5.6 bps overall.
The 10-year MGS rose by 5.3 bps to 3.762 per cent, while the 10-year GII increased by 5.6 bps to 3.778 per cent. - Bernama
