Tuesday, February 7, 2017

Malaysia: MGS curve bull-steepened with yields 14-19bps lower along the 1y3y, 7-15bps lower along the 7y10y and 10-12bps lower along the 15y20y YTD. Our non-consensus call for a recovery in bond yields is playing out as USD

MY & SG Bond Market Watch: Bonds Recover as USD Retreats

·         Malaysia: MGS curve bull-steepened with yields 14-19bps lower along the 1y3y, 7-15bps lower along the 7y10y and 10-12bps lower along the 15y20y YTD. Our non-consensus call for a recovery in bond yields is playing out as USD strength retreats and market regains some confidence toward EM bonds on partial reversal of Trump’s reflationary bets. We maintain our mildly positive view on MGS and reiterate our 10y MGS yield forecast of 4.00% by end-1Q17.

·         Singapore: SGS yield curve shifted lower alongside a retreat in USDSGD. YTD, yields at the belly part of the curve were lower by 20-23bps along the 5y15y and lower by 4-10bps in the longer 20y30y sector. Near term, we reckon that yields should remain supported on stable USDGD and still lower funding rates.

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