Yields jump on more hawkish US Fed

Published on 20 Oct 2021.

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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.


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Publication Date Published Category
Bond Market Monthly - October 2021 20-Oct-2021 Bond Market Monthly View PDF