Published on 20 Mar 2023.
Foreign investors remained net purchasers of MGS and GII for the fourth straight month in February, generating an inflow of RM5.0 bil, almost double the RM2.7 bil seen in January. The overall fund inflow surged to RM4.3 bil (January: RM498.3 mil), despite continued outflows from MTB and MITB (RM316.0 mil).
However, yields fell abruptly in March, after market confidence was roiled by the sudden collapse of Silicon Valley Bank (SVB) and subsequent shutdown of Signature Bank in the US. The 10-year UST yield plunged to 3.39% as of 17 March, down 53 bps from end-February. The 10-year MGS initially followed suit, falling 8.3 bps to 3.87% as of 14 March from end-February but has since recovered to 3.96% on 17 March. In the short term, UST yields are likely to remain pressured by current sentiments coupled with speculations about the US Federal Reserve’s next rate move.
MGS yields may continue to trend relatively low, tracking the downward pressure on UST yields. That said, there appears to be limited impact from the SVB collapse on domestic market confidence so far. Ringgit bonds should remain supported by healthy demand from local investors.
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