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>MGS yields closed lower >Forthcoming Tender: New Issue of 7-year MGS
Yields of Malaysian Government Securities (MGS) closed lower after Bank Negara projected a lower average inflation for the year 2018 on expectations of a smaller effect from global cost factors, thereby spurring investor’s demand for local bonds. Meanwhile, the reopening of 30-year Government Investment Issue (GII) maturing May 8, 2047, was successfully issued at 4.93% with bids exceeding the auction size of RM1.5bil by 2.07 times. Bank Negara announced the new issue of the 7-year MGS maturing March 2025 with an auction size of RM3bil.
>OPR unchanged at 3.25% >Klibor: Rates remained unchanged >Bank Negara remained steadfast in borrowing short-term money
Bank Negara maintained its Overnight Policy Rate (OPR) unchanged at 3.25% at its monetary policy meeting last Thursday. Bank Negara continued to mop up less liquidity from the market through money tenders. The central bank borrowed RM15.3bil against its term maturities of RM18.6bil and reverse repo amounting to RM300mil with financial institutions.
Kuala Lumpur Interbank Offered Rate (Klibor) remained unchanged across all tenors. In the deposit market, overnight money last traded between 3.20% and 3.25%. The 1 week to 1-month money traded at rates between 3.32% and 3.40%. Meanwhile, 2 and 4 months Negotiable Instruments of Deposits last transacted between 3.65% and 3.79% in
>Bank Of Canada Holds Rates Steady >European Central Bank Drops Easing Bias
The Canadian overnight rate was held steady at 1.25% after the bank raised rates in January. The statement noted “trade policy developments are an important and growing source of uncertainty,” a clear nod to the Trump administration’s proposed tariffs on steel and aluminum. Inflation developments have been consistent with the economy running at full capacity, but wage growth was once again seen as indicating a bit of labour market slack. The Bank of Canada is keeping an eye on how regulatory changes impact the housing market, and how credit growth is responding to higher interest rates. European Central Bank (ECB) left its main refinancing rate unchanged at 0.00% as widely expected. The marginal lending facility rate and deposit facility rate also remained at 0.25% and -0.40%, respectively. The bond-buying program to buy 30bil assets per month till September is also held unchanged. The most important part of the policy statement is that the option to “expand” the asset program is taken out, dropping its easing bias. However, the ECB reiterated that bond purchases “are intended to run until the end of September 2018, or beyond, if necessary.”
Malaysia’s export figures rose by a robust 17.9% Y-o-Y in January after rising 4.7% Y-o-Y in the preceding month. Imports also rose 11.6% Y-o-Y in January after rising 7.9% Y-o-Y in the preceding month. The nation’s trade balance has now improved to RM9.71bil, against analyst’s estimates of RM7.90bil.