The Thomson Reuters BPAM All Bond Index saw an increase of 0.168 per cent to 160.615 points from 160.346 points last Friday amid strong demand for shorter tenure bonds in this holiday-shortened week, while the Malaysian ringgit strengthened against the greenback to close at 4.1280 from 4.1385 last week.
On 19 September 2018, Department of Statistics Malaysia (DOSM) reported that the Consumer Price Index (CPI) increased slightly by 0.2 per cent in August 2018 on a year-on-year basis.
The softer gain was mainly due to slower growth in Transport prices (2.1 per cent), Food & Non-Alcoholic Beverages (0.4 per cent), Housing, Water, Electricity, Gas & Other Fuels (two per cent), Restaurants & Hotels (0.7 per cent) and Education (1.1 per cent).
On September 21, 2018, BNM has reported the international reserves of US$103.9 billion as at September 14, 2018. The reserves position is sufficient to finance 8.1 months of retained imports and is 0.9 times the short-term external debt.
Earlier this week, the US-China trade tension escalated as the Trump administration announced to carry on with another round of tariffs to be imposed on US$200 billion of Chinese goods at 10 per cent from September 24, 2018 onwards, and the rate will be increased to 25 per cent in January.
In addition, tariffs on approximately US$267 billion of additional imports will be proposed if China were to take retaliatory action. China, on the other hand, responded by levying tariffs on US$60 billion of US goods.
The US Treasuries shifted higher this week, with the 10-year Treasury stood at 3.07 per cent from 2.99 per cent last Friday. Focus next would be the Federal Open Market Committee (FOMC) meeting next week, and the Fed is widely expected to increase the interest rates for the third time in 2018 on the back of strong economic data.
Top 10 most active bonds:
The top 10 most active bonds increased to RM8.3 billion from RM6.0 billion last week. Interests were seen in shorter tenure papers, with off-the-run GII and MGS maturing on 30 April 2019 and 29 April 2019 recorded a trade volume totalled RM3.1 billion.
Sovereign auction(s):
On September 18, 2018, BNM announced the tender details for the reopening of the 10-year benchmark MGS maturing on 15 June 2028 with an issuance size of RM3.0 billion. The tender closed on September 20, 2018, with a bid-to-cover ratio of 2.67 times. The auction recorded the highest, average and lowest yields at 4.1, 4.097 and 4.08 per cent respectively.
New issuance(s):
On September 19, 2018, Sabah Credit Corporation issued a three-year Islamic Medium Term Notes (IMTN) with an issuance size of RM80 million. The IMTN carries a profit rate of 4.533 per cent, and is rated AA1 with stable outlook by RAM Ratings.
Sports Toto Malaysia Sdn Bhd issued a three-year Medium Term Notes (MTN) amounted to RM30 million with coupon rate of 4.9 per cent. The MTN is rated AA- with stable outlook by MARC.