PUBLIC BANK MONEY MARKET REVIEW FOR THE WEEK ENDING JUNE 1, 2018
>MGS yields closed lower >New Issue of 5.5-year GII issued at 4.094% >Forthcoming Tender: New Issue of 20-year MGS
Yields of Malaysian Government Securities (MGS) closed lower on the back of relief rally following officials in Italy agreed to a deal that averts the threat of fresh elections and eased investor’s concerns on the fallout of Euro. Meanwhile, the new issue of 5.5-year GII maturing Nov 30, 2023, was successfully auctioned off at 4.094% with bids exceeding the auction size of RM4bil by 1.99 times. Bank Negara will be announcing the new issue of the 20-year MGS maturing June 2038 with an expected auction size of RM2.5bil. The closing yields of benchmark MGS are as follows:
MONEY MARKET
>Klibor: Rates remained unchanged
>Bank Negara remained steadfast in borrowing short-term money
Bank Negara continued to mop up less liquidity from the market through its money tenders last week. The central bank borrowed RM7.6bil against its term maturities of RM13bil and conducted repo tender amounting to RM100mil with financial institutions. The money and repo tenders were conducted as follows:
Kuala Lumpur Interbank Offered Rate (Klibor) remained unchanged across all tenors. In the deposit market, overnight money traded between 3.20% and 3.25%. The one week to one month money last traded between 3.30% and 3.43%.
Meanwhile, three months Negotiable Instruments of Deposits last transacted at 3.69% in the interbank market.
FOREIGN EXCHANGE
>US 1Q growth little changed
>US 1Q consumer spending remains soft
>German inflation figures climbed more than estimated
US annualized gross domestic product came in lower at 2.2% in 1Q 2018 against analyst’s expectations of a 2.3% increase. This was 0.1% lower compared to the quarter before, primarily reflecting a downturn in private inventory investment, residential fixed investment, and exports that were partly offset by an upturn in non-residential fixed investment. Meanwhile, US consumer spending remained soft at 1% annualized, down from 1.1% in the previous quarter. This was against analyst’s expectations of a 1.2% increase. Germany consumer price index (CPI) advanced more than estimated by 2.2% on an annual basis in May, rising by the most since February 2017, amidst a surge in energy prices. Market participants had expected the CPI to rise 1.9%, after registering a gain of 1.6% in the previous month.
The local currency traded near a fourmonth low as the pace of oil price gains cooled and risk sentiment soured on global trade tensions. The weakening of the ringgit was also due to a stronger greenback and weakening investor sentiment towards emerging markets.