Published on 28 Feb 2022.
Foreign buying of Malaysian bonds (net total inflows: RM3.5 bil) continued into January despite a surge in global yields following the US Federal Reserve’s impending interest rate hike. Net foreign purchases of MGS and GII amounted to RM4.3 bil in January (Dec 2021: RM6.3 bil).
UST yields rose broadly across all tenures, with the 10-year yield jumping 27.0 bps m-o-m to 1.79% as of end-January and 1.97% as of 25 February. This led to thinner 10-year MGS-UST yield spread of circa 170 bps in February (average 4Q 2021: 206 bps).
The recent Russia-Ukraine conflict represents a key risk to the financial markets in emerging economies, which if prolonged, could dampen foreign investor demand in this region.
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