PUBLIC BANK MONEY MARKET REVIEW FOR THE WEEK ENDING SEPT 8, 2017

>MGS yields closed lower >Re-opening of 3.5-year MGS issued at 3.441% >Forthcoming Tender: Reopening of 7-year MGII

Yields of Malaysian Government Securities (MGS) closed sharply lower especially in the belly of the curve as ringgit strengthened to its strongest level this year against the greenback and fueled offshore demand for local sovereign bonds.

Meanwhile, the re-opening of 7-year Government Investment Issue (GII) maturing August 30, 2024 was successfully issued at 3.975% with bids exceeding the auction size of RM3.5bil by 2.104 times.

Bank Negara will be announcing the re-opening of 5-year MGS maturing March 2022 with an expected auction size of RM3bil.

Bank Negara left its Overnight Policy Rate (OPR) unchanged at 3% after the Monetary Policy Meeting on Thursday.

Bank Negara mopped up more liquidity from the market through its conventional money tenders. The central bank conducted borrowings amounting to RM 22.7bil against its term maturities of RM 19.1bil with financial institutions. Kuala Lumpur Interbank Offered Rate (Klibor) remained unchanged across all tenors.

In the deposits market, overnight money traded between 2.90% and 3%. The 1 week to 3 week money traded at rates between 3.05% and 3.12%. Meanwhile 2 and 4 months Negotiable Instruments of Deposits last transacted between 3.38% and 3.52% respectively in the interbank market.

US initial jobless claims rose by 62,000 to 298,000 for the week ending September 2, 2017 as compared to a 236,000 reading the previous week. Market expectations were for an increase to 245,000.

Continuing claims for the week ending August 26 fell by 5,000 to 1.940 million as compared to the previous week’s revised reading of 1.945 million.

Meanwhile, US trade deficit remained broadly unchanged in July, widening slightly to US$ 43.7bil as compared to market expectations of US$ 44.6bil. June’s data was revised slightly lower to US$ 43.5bil from US$ 43.6bil.

The Bank of Canada decided to hike interest rates by 0.25% instead of staying put for the second time this year. That added strength to the Canadian dollar across the board, on top of the pickup in crude oil prices in anticipation of better than expected US Energy Information Administration inventory data.

The local currency headed for its biggest weekly gain in a year on the back of dollar weakness and improving Malaysian growth outlook.

On the data front, Malaysia’s exports rose to 30.9% Y-o-Y in July as compared to 10% Y-o-Y in the preceding month.

Imports rose to 21.8% Y-o-Y in July as against 3.7% Y-o-Y in the preceding month.