Foreign net purchases of Malaysian bonds persisted in November

Published on 18 Dec 2025.

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Foreign interest in the Malaysian bond market strengthened further in November, with net foreign inflows rising to RM6.1 bil (October: RM4.4 bil), led by MGS and GII (RM4.0 bil) and corporate bonds (RM2.1 bil). The stronger foreign appetite coincided with a further narrowing in the UST–MGS yield differential, where the 10-year spread tightened to 53.3 bps as at end-November (end-October: 59.1 bps), improving the appeal of local bonds.

This continued narrowing of the UST-MGS yield spread in November was driven largely by stronger downward pressure on UST yields amid a widely expected US interest rate cut heading into December. As expected, the Federal Reserve (Fed) delivered a 25-bps rate cut at its December 2025 Federal Open Market Committee (FOMC) meeting, in view of the moderating growth. That said, it was a ‘hawkish’ cut, with policymakers signalling caution over the pace of future easing and decisions ahead will remain data-dependent. Market expectations have since shifted decisively toward a pause, with the probability that policy rate would remain unchanged at the January 2026 FOMC meeting rising to around 76% as of mid-December, from 49% a month earlier, according to the CME FedWatch Tool.

With a likely pause in Fed policy moves in the near-term, the 10-year UST yield edged higher to 4.18% as of mid-December (end-November: 4.02%), while the 10-year MGS yield rose moderately to 3.60% (end-November: 3.49%). Given the stronger upward pressure on UST yields, the 10-year UST-MGS yield differential widened modestly to around 58.1 bps as at 15 December. The ringgit, however, trended firmer in early December, appreciating to around 4.09 against the USD as of 16 December, compared with 4.13 at end-November.

 

Analytical contact Woon Khai Jhek, CFA  (603) 2708 8286 khaijhek@ram.com.my		Media contact Sakinah Arifin (603) 2708 8212 sakinah@ram.com.my
Nur Rasyidah Abd Karim (603) 2708 8208 rasyidah@ram.com.my

 

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