Foreign net inflows into Malaysian bonds eased in January

Published on 20 Feb 2026.

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Foreign investor participation in the Malaysian bond market continued to grow for the fourth straight month in January 2026, although net buying moderated compared to the previous months, partly due to the wider UST-MGS yield differential last month and the cautious outlook on US Federal Reserve (Fed) rate cuts.

Net foreign inflows reached RM951.9 mil, (December 2025: RM3.0 bil), driven primarily by continued demand for MGS and GII, which saw inflows of RM2.1 bil (December 2025: RM2.3 bil). This was partly offset by outflows from MTB & MITB and corporate bonds, amounting to RM480.0 mil and RM709.3 mil, respectively.

The 10-year UST yield rose 8.0 bps m-o-m to 4.26% as at end-January, reflecting firmer global yields as markets reassessed the pace and timing of US monetary easing. In contrast, the 10-year MGS yield declined 1.4 bps m-o-m to 3.52%, supported by resilient domestic demand and stable policy expectations. The resulting wider yield differential of 74.4 bps (end-December 2025: 65 bps) likely reduced the attractiveness of Malaysian bonds to foreign investors.

Market focus on the March 2026 Federal Open Market Committee meeting intensified, as investors reassess future interest rate trajectory amid the still resilient US labour market. According to the CME FedWatch Tool, the implied market probability that the Fed will hold rates steady during the March meeting rose to 94.1% as at 19 February from 78.9% a month earlier.

 

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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