Malaysian bond yields diverge ahead of BNM rate decision
The 10-year government bond yield reached 4.02 per cent, while foreign investors withdrew a net RM0.92 billion in a separate reporting period.
Malaysia’s longer-term government bond yields increased over Oct 21–28 while shorter-term yields fell, as investors awaited Bank Negara Malaysia’s monetary policy decision scheduled for Nov 5, according to RAM Ratings.
In its Oct 29 market update, the rating agency said investors were watching the central bank’s assessment of growth and inflation as well as its interest rate decision. RAM expected BNM’s guidance to influence pricing for shorter-dated Malaysian Government Securities (MGS) and expectations about future domestic rates.
The yield on 10-year MGS increased by 10 basis points over the week, reaching 4.02 per cent. By contrast, yields for maturities ranging from six months to two years dropped by 0.4 to 0.8 basis points.
US bonds moved differently: the 10-year Treasury yield fell eight basis points to 5.05 per cent during the same period. RAM said upcoming US employment and inflation figures could put renewed upward pressure on Treasury yields if they exceeded expectations, with potential effects on MGS.
Foreign holdings registered net outflows of RM0.92 billion in the week ended Oct 21, reversing the previous week’s RM0.03 billion inflow. Government bonds recorded RM1.64 billion in outflows, while corporate bonds attracted RM0.72 billion, up from RM0.61 billion a week earlier.
