Malaysian bond market on edge ahead of BNM policy meeting
KUALA LUMPUR: Malaysia's bond market is bracing for a potential reset in the domestic rates narrative as attention pivots to Bank Negara Malaysia's (BNM) upcoming monetary policy decision on Nov 5.
Malaysia's bond market is bracing for a potential shift in its rates narrative as Bank Negara Malaysia's (BNM) monetary policy decision looms on November 5. According to RAM Ratings, the focus is not solely on the interest rate decision, but rather on the central bank's updated growth and inflation assessments, which will significantly impact front-end Malaysian Government Securities (MGS) pricing and expectations for the domestic policy trajectory.
The Federal Reserve's recent decision to hold benchmark interest rates steady has shifted attention to US inflation data and the upcoming November employment report. External financial conditions remain complex, with geopolitical risks casting a shadow over the rates outlook. The MGS yield curve has become bear-steepened, with yields on the 10-year MGS rising by 10 basis points, while short-term yields have edged lower.
Despite the narrowed gap between MGS and US Treasury yields, Malaysian bonds remain vulnerable to US rate expectations and ringgit volatility. Foreign fund flows have seen a weekly net outflow of RM0.92 billion, primarily driven by heavy selling in government bonds.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
