CLICK TO ENLARGE
PETALING JAYA: Economists and fixed-income analysts are cautiously optimistic that foreign demand for ringgit bonds will pick up next year.
The total net foreign outflows improved to RM1bil in November from a high of RM6.3bil in October.
However, they said the demand for local bonds would hinge closely on the pace of the US Federal Reserve’s (Fed) policy rate hikes and the state of the global economy, adding that the Fed has started to take a more dovish view with the upcoming rate hikes not expected to rise as fast as the previous hikes.
The Fed has taken an aggressive approach to tame inflation by raising its benchmark overnight interest rates, which is now at 3.75% to 4% – the fourth such increase in a row – from a range of 0% to 0.25% in early March.
The next Fed’s policy meeting is scheduled tomorrow to Wednesday, whereby the market generally has priced in a slower 50-basis-point (bps) hike.
RAM Rating Services senior economist Woon Khai JhekAccording to RAM Rating Services Bhd senior economist and head of economic research Woon Khai Jhek, demand for government bonds should improve next year after the persistent sell-off seen this year subsides.,
The sell-off is primarily triggered by the aggressive rate hikes by the Fed, which sent bond prices into a freefall globally.
Woon told StarBiz that the sell-off pressure in emerging markets such as Malaysia was further compounded by elevated risk aversion amid fears of an impending global recession.
This has dragged bonds into a bearish market in 2022 as yields jumped to a multi-year high.
With the recent Fed’s message of a slower pace of rate hikes moving ahead, he said the sell-off pressure should ease in 2023 as the risk-off sentiment dissipates among foreign investors.
“There are some signs of a return in buying interest as bond yields started to fall last month, with the 10-year US Treasury (UST) and Malaysian Government Securities (MGS) yield declining to 3.68% and 4.13%, respectively, as of end-November 2022.
“Should investor appetites continue to improve, demand for MGS in 2023 is likely to be stronger. Bond market trends next year will still be largely dependent upon the eventual monetary policy decision, particularly by the Fed.
“If the Fed decides to re-adopt a more hawkish stance to fight rising inflation and raise policy rates faster and higher than initially expected, this could negatively impact investor demand for MGS in 2023,” said Woon.
Bond Pricing Agency CEO Meor Amri Meor AyobBond Pricing Agency Malaysia (BPAM) CEO Meor Amri Meor Ayob also shared similar views that the Fed is expected to slow down the interest rate hike regime as inflationary pressures started to show signs of weakness recently.,安徽新闻网声明:该文看法仅代表作者自己，与安徽新闻网无关。转载请注明：新2线上开户:Govt bonds in for higher demand新2正网平台出租（www.hg8080.vip）是皇冠（正网）接入菜宝钱包的TRC20-USDT支付系统，为皇冠代理提供专业的网上运营管理系统。系统实现注册、充值、提现、客服等全自动化功能。采用的USDT匿名支付、阅后即焚的IM客服系统，让皇冠代理的运营更轻松更安全。