Global bond rout amid signals of higher for longer interest rates

Published on 17 Oct 2023.

Share Tweet Email

Global bond markets underwent a beatdown last month, led by long-dated papers, in reaction to global interest rates possibly staying higher for longer than previously expected. Contrary to market bets, the US Federal Reserve (Fed) not only maintained its expectations of one more 25 bps hike by end-2023, but also revised its interest rate forecast for 2024 and 2025 upwards. The Fed now projecting only two 25 bps rate cuts in 2024 as opposed to the four projected in June.

The higher interest rate expectations led to a sharp unwinding of positions. Bond offloading was particularly acute on the long end; 10-year UST yields surged 50.0 bps m-o-m to 4.59% as of end-September 2023, the highest level since September 2007. The MGS yield curve also bear steepened last month, with the 1-year and 10-year MGS yields respectively rising 3.8 bps and 13.4 bps m-o-m to 3.30% and 3.98% as of end-September. The weak sentiment led to a foreign investor selldown of Malaysian bonds for the second consecutive month in September, led by MTB/MITB (RM4.5 bil) and MGS/GII (RM78.9 mil).

While the bear run persisted into the first week of October (average 10-year yield for UST: 4.75%; MGS: 4.06%), a slight reprieve was seen the following week as yields started to retreat (average 10-year yield for UST: 4.64%; MGS: 4.04%).


Analytical contact
Woon Khai Jhek, CFA
(603) 3385 2512
                     Media contact
Sakinah Arifin
(603) 3385 2500



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 Credit Rating Agencies. 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 2023 by RAM Rating Services Berhad
All rights reserved. This material may not be published, reproduced, broadcast, rewritten or redistributed without prior permission.

Publication Date Published Category
Bond Market Monthly - October 2023 17-Oct-2023 Bond Market Monthly View PDF