PETALING JAYA: Malaysian government bonds have given back some of their post-budget gains, with yields up one to 14 basis points since Oct 16.
According to CIMB Research, the curve has steepened most around the 10-year point, a sign that investors are positioning cautiously after the MSCI shock in Indonesia. The research house said unlike the January episode, the latest MSCI shock in the neighbouring country did not trigger asset reallocation into Malaysian sovereign bonds.
This time, foreign investors pulled out RM1.9bil between Oct 16 and Oct 21.
CIMB Research is keeping its 4% year-end forecast for the 10-year Malaysian Government Securities yield.
“Supply is unchanged and the US Federal Reserve is expected to stay hawkish this week,” it said.
It explained that risks are higher US yields, pricier oil and a tougher tone from Bank Negara Malaysia.
