FW: RHB FIC Rates & FX Market Update - 21/12/17

 

 

 

 

21 December 2017

 

 

Rates & FX Market Update

 

Our daily publication will resume on Tuesday, 2 January 2018.

Wishing you a Merry Christmas and Happy New Year 2018!

 

BoT Held Benchmark Rate at 1.50%, and Upgraded its GDP Forecasts

 

Highlights

 

¨   Global Markets: Subdued movements seen in global markets overnight as US tax reform chatters continue as the government funding deadline approaches. 10y UST yields climbed c.3bps towards the 2.50% level, although unlikely to surge past 2.65% over the coming weeks as the Congress bill is mostly priced in by investors already. We continue to maintain our neutral UST stance, with any uptick in yields likely to be limited given Fed policy risks tilted towards the dovish end.

¨   AxJ Markets: Over in Thailand, while BoT held its benchmark rate at 1.50% as expected, it raised its 2017 GDP forecast to 3.9% (previous: 3.8%) on better export and tourism growth; 2018 forecast also raised to 3.9% (previous: 3.8%). The central bank is likely to maintain the current policy stance till investment and consumer spending picks up, driving a broad-based recovery. Low inflation also remains an issue to be tackled, which could continue to support foreign inflows into Thai bonds over 1H18; maintain neutral ThaiGB duration stance.

¨   MYR gained c.0.2% against the USD overnight, in line with performance seen across Asian currencies. November CPI came in at 3.4% y-o-y, in line with consensus and a touch lower than October's print, offering BNM the flexibility to decide on the timing for the next rate hike, as hinted in the last MPC meeting. We believe MYR could continue to edge gains over the coming months, as investors' confidence towards Malaysian assets continue to rise on bright growth and fiscal consolidation prospects; stay mildly bullish MYR over the medium term.

 

 

 

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