Paring of Fed rate cut expectations dampens foreign appetite for MGS and GII in April

Published on 20 May 2024.

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Foreign investors remained net buyers of Malaysian bonds for the second consecutive month in April 2024, although the pace of the fund inflow was milder at RM0.6 billion (March: RM1.7 billion). The decline was primarily driven by MGS and GII which recorded a smaller net inflow of RM1.2 bil (March: RM2.2 bil). Foreign investment was dulled by fading prospects of a policy rate cut by the US Federal Reserve (Fed) in the near term as its battle with inflation persists for longer than initially expected.

At the latest Federal Open Market Committee meeting in May, the Fed kept the interest rate unchanged while also acknowledging strong US economic data and stickier than anticipated inflation. This sentiment continues to drive market movements this month, which have nevertheless subsided somewhat compared to April. The 10-year UST and MGS yields stood at 4.42% and 3.88%, respectively, as of 17 May – down from 4.69% and 3.99% as of end-April (end-March: 4.20% and 3.88%). Receding investor jitters also helped push the value of the ringgit up to 4.69 against the US dollar as of the same date (end-April: 4.77).

 

Analytical contact Woon Khai Jhek, CFA (603) 3385 2512 khaijhek@ram.com.my		Media contact Sakinah Arifin (603) 3385 2500 sakinah@ram.com.my
Nur Rasyidah Abd Karim (603) 3385 2490 rasyidah@ram.com.my

 

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