Malaysia’s bond yields may rise modestly in the near term amid renewed global trade tensions, said Kenanga Investment Bank Bhd (Kenanga Research).
The investment bank said markets are growing wary of escalating United States-European Union (US-EU) tariff frictions, Donald Trump’s forthcoming fiscal bill, and the potential reimposition of tariffs in the weeks ahead.
“Investors will closely monitor upcoming US economic data for signs of weakness that could justify rate cuts by the US Federal Reserve (Fed),” it said in a research note today.
According to Kenanga Research, yields on Malaysian Government Securities (MGS) and Government Investment Issues (GII) fell by 0.1 to 7.9 basis points (bps) across the curve over the week.
The 10-year MGS eased by 4.6 bps to 3.54 per cent, while the 10-year GII slipped by 3.6 bps to 3.54 per cent.
“Initial risk-off sentiment, spurred by US involvement in the Iran-Israel conflict, dissipated following the announcement of a ceasefire.
“Market sentiment was further buoyed by the signing of a free trade agreement with the European Free Trade Association (EFTA) members—Switzerland, Norway, Iceland, and Liechtenstein—alongside deepening economic ties with Kyrgyzstan and Uzbekistan,” it said.
Additionally, constructive developments in Malaysia-US tariff negotiations and reports of Intel’s planned semiconductor expansion added to the positive tone, strengthening Malaysia’s appeal as an investment destination