Thursday 28 Mar 2024
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KUALA LUMPUR (April 7): The local bond market took a beating after a fresh salvo of hawkish remarks from the US Federal Reserve (Fed) which solidified expectations for more aggressive US interest rates hikes.

“The local bond market saw knee-jerk selling pressure with the benchmark three-year +3.5bps (basis points) to 3.225%, five-year +5bps to 3.48%, seven-year +4.5bps to 3.86% and 10-year +8.5bps to 4.020%,” according to a daily highlight report released by AmBank Research on Thursday (April 7).

Meanwhile, RHB Research said in its fixed-income strategy note that secondary volume surged by 80% to RM3.317 billion with selling momentum following another hawkish remark by the Fed on rapid balance sheet reduction.

“MGS3YR (Three-year Malaysian Government Securities) 3/25 maintained its top position as the most actively traded government bonds, with the yield rising slightly by 2.3bps to 3.215%,” RHB Research's fixed income strategy showed. 

The 10-year MGS 7/32 yield traded within the range of 4.013% to 4.074%, ending 8bps higher from Tuesday’s close at 4.019%, it added.

Reuters reported that Fed governor Lael Brainard said she expects a combination of interest rate increases and a rapid balance sheet run-off to bring US monetary policy to a "more neutral position" later this year, with further tightening to follow as needed.

It was reported that the Fed on Wednesday released the minutes of its March 15 and 16 meeting, which detailed conversations among top central bank officials suggesting that the Fed will soon start the process of shrinking its US$9 trillion (about RM37.96 trillion) balance sheet.

Edited BySurin Murugiah
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