· In the FOMC meeting minutes released overnight, the Fed has highlighted that a shift in balance sheet policy is warranted soon and they will considering trimming the currentl

Today’s trade recap by our trading desk:-
·         In the FOMC meeting minutes released overnight, the Fed has highlighted that a shift in balance sheet policy is warranted soon and they will considering trimming the currently 4.5T balance sheet when the time is right. It’s still early days nevertheless and there was no further details about this. Despite this hawkishness, the market reacted the other way when UST yields dropped by 3-4bps. In the local market today, focus was on the newly issued 20Y MGS. The auction closed with a rather weak BTC of 1.585x and averaged 4.762. The weak participation despite auction size being just RM2.0bio was partly due to recent GG issuance where most local funds have participated in and eventually resulted in a wider high-low range for this auction. Post auction, the bond was straight slightly above the average at 4.77 level while volume was thin. Secondary market traded sideways today as the curve ended the day 1-3bps higher.
Malaysia Government Bonds Benchmark Issues MGS Closing Level (%) Change (bp) Volume (RM m) 3-yr 3.545 - 11 5-yr 3.835 +1.0 20 7-yr 4.050 +1.0 276 10-yr 4.135 +1.0 47 15-yr 4.500 +2.0 - 20-yr 4.780 NEW 51 30-yr 4.835 +3.5 11 Source: BondStream, AmBank	Interest Rate Swap Closing Rates IRS Closing Yield (%) Change (bp) 1-yr 3.570 1.0 3-yr 3.747 1.7 5-yr 3.865 0.5 7-yr 3.958 0.2 10-yr 4.090 0.5 Source: Bloomberg, AmBank