Published on 20 Oct 2021.
The bond market faced notable selloff pressure over the past few weeks amid the more hawkish stance taken by the US Federal Reserve (Fed). At its most recent monetary policy meeting in September, the Fed indicated it would start tapering asset purchases soon, while also signalling that interest rate hikes could commence as early as 2022 instead of 2023 as previously expected.
In anticipation of an accelerated monetary policy normalisation, US Treasury (UST) yields turned steeply upwards, especially on the longer end of the yield curve. The benchmark 10-year UST yield rose to 1.52% as at end-September (+22bps m-o-m). In tandem, MGS yields saw notable upward pressure across the board. The 10-year MGS yield climbed 17.4 bps m-o-m as at end-September.
The global bond market selloff affected foreign holdings of long-term MGS and GII, charting a net outflow of RM215.7 mil in September (August: net inflow of RM6.2 bil). However, short-term government securities (RM469.0 mil) and corporate bonds (RM390.8 mil) recorded net inflows, resulting in a positive overall foreign flow of RM644.1 mil.
About RAM Rating Services Berhad (RAM Ratings)
Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Registration of Credit Rating Agencies, 2011. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains.
ALL INFORMATION IS PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND. Although every reasonable care has been taken to ensure the accuracy, completeness and objectivity of the information contained in this Media Release, RAM Ratings makes no representation or warranty, whether express or implied, as to its accuracy, completeness and objectivity and accept no responsibility or liability relating to any losses or damages howsoever suffered by any person arising from any reliance on the views expressed or information in this Media Release. RAM Ratings assumes no obligation to update any information or statement contained herein, save for any information required to be disclosed by law.
Published by RAM Rating Services Berhad
© Copyright 2021 by RAM Rating Services Berhad
All rights reserved. This material may not be published, reproduced, broadcast, rewritten or redistributed without prior permission.