Foreign investors return to Malaysian bond market in March despite global uncertainties

Published on 17 Apr 2026.

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Foreign investor sentiment on Malaysian bonds rebounded in March, with a net inflow of RM6.1 bil, reversing the RM2.5 bil net outflow recorded in February and marking the strongest monthly inflow in 10 months. The recovery was driven mainly by renewed demand for Malaysian Government Securities (MGS) (RM5.1 bil) and conventional corporate bonds (RM2.8 bil).

Global bond markets were especially volatile in March, largely due to a sharp repricing of US interest rates amid concerns over a potential oil-driven inflation shock, triggered by supply disruptions following a sharp escalation of the Mideast conflict. Volatility in US Treasuries (UST), as measured by the MOVE Index, climbed to an 11-month high around late-March, while yields spiked across the curve. The 10-year UST yield rose to a peak of 4.44% on 27 March, from 3.97% as at end-February, as expectations of near-term US Federal Reserve (Fed) rate cuts diminished. Market sentiment increasingly shifted towards a “higher-for-longer” interest rate environment. According to CME FedWatch data, the probability that the Fed would keep policy rates unchanged at upcoming April and June FOMC meetings rose sharply to 99.5% and 98.0%, respectively, as at 17 April, from 75.4% and 42.7% as at end-February.

The rise in UST yields also exerted upward pressure on yields across regional bond markets. The 10-year MGS yield was up 14.4 bps m-o-m at 3.66% as at end-March. Going forward, the market focus will remain on developments in the Middle East, as prospects for global market stability hinge on the outcome of upcoming US-Iran negotiations and the resolution of oil supply concerns. Bond yields eased moderately and moved largely sideways in the first half of this month, with 10-year UST and MGS yields standing at 4.32% and 3.61%, respectively, on 16 April.

 

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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