PUBLIC BANK MONEY MARKET REVIEW FOR THE WEEK ENDING JULY 3, 2020

> MGS yields closed lower > Reopening of 20-year GII was successfully auctioned off at 3.761% > Forthcoming tender: Reopening of 3-year MGS Yields of Malaysian Government Securities (MGS) closed lower as investors anticipate Bank Negara to cut overnight policy rate by another 25 basis points in the next Monetary Policy Committee meeting on July 7, 2020. Meanwhile, the reopening of 20-year Government Investment Issue (GII) was successfully auctioned off at 3.761% with bids exceeding the auction size of Rm3.5bil by 2.06 times. Bank Negara will be announcing the auction for the reopening of 3-year MGS maturing May 15, 2023 with an expected auction size of Rm5.0bil. The closing yields of benchmark MGS are as follows: > Klibor: Rates remained unchanged > Bank Negara remained steadfast in borrowing short-term money Bank Negara mopped up less liquidity from the market through its money tenders this week. The central bank borrowed Rm16.9bil against its term maturities of Rm23.8bil and conducted Rm950mil repo as well as Rm700mil reverse repo 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 1.95% and 2.00%. The 1-week to 1-month money was last traded between 2.04% and 2.15% while 1-week reverse repo was last traded between 2.00% and 2.03% in the interbank market. > US non-farm payroll up > US employment up 4.8 million in June > Eurozone’s Markit Manufacturing PMI up US non-farm payrolls rose by 4.8 million in June, beating the median consensus forecast for three million. US unemployment rate fell to 11.1% from 13.3% in May albeit holding at an extremely high level. The drop was largely accounted for by a decline in temporary unemployment as some businesses reopened but the number of people on permanent layoff actually increased by almost 600 thousand. Meanwhile, the Federal Open Market Committee, in its June meeting minutes, indicated that it expects loose policy to last “for many years” until the economy gets back to normal. Eurozone’s Markit Manufacturing PMI climbed to 47.4 in June, compared to a level of 39.4 in the prior month. The preliminary figures had indicated an advance to 46.9. Separately, Germany’s unemployment rate rose less-than-expected to 6.4% in June, compared to a rate of 6.3% in the previous month. Malaysia’s trade balance recorded a Rm10.41bil surplus in May as compared to a revised Rm3.63bil deficit in the preceding month. However, Malaysia’s exports fell by 25.5% year-on-year (y-o-y) in May as compared to a 23.9% y-o-y fall in the preceding month. Market expectations were for a 20.2% decline.