Published on 18 Oct 2022.
Foreign demand for MGS and GII waned in September (net outflows: RM2.5 billion) amid the continued hawkish stance of the US Federal Reserve in raising rates. Year to date, the Fed has raised rates by a total of 300 basis points. The 10-year UST yield jumped 68.0 bps m-o-m to 3.83% as at end-September, outpacing the 10-year MGS yield which rose 45.7 bps to 4.44% as at the same date. Consequently, this has narrowed the differential between MGS and UST yields, reducing the appeal of ringgit bonds for foreign buyers. The rate differential persisted in October, where the UST yields continued to outpace the increase in the MGS yields.
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