Malaysian Bonds See Modest Outflows Ahead of Auction; Global Bonds Gain

Malaysian government bonds saw modest net selling following the release of the country’s latest GDP figures, ahead of Tuesday’s auction of the 10-year Government Investment Issue (GII) maturing in 2035, with an issuance size of RM5 billion.

In the private debt securities (PDS) market, trading remained active among higher-grade AAA and quasi-sovereign names. Heavier volumes were seen in PASB 08/34 (AAA), which closed 1 basis point lower at 3.67%, while Danainfra 07/39 in the quasi-sovereign segment fell 5 basis points to end at 3.72%.

Globally, US Treasuries (UST) posted modest gains with the 10-year yield approaching 4.40%, supported by a decline in short-term inflation expectations (July: 4.4%; June: 5.0%) and dovish comments from Federal Reserve Governor Christopher Waller. In Japan, election results suggested potential upward pressure on Japanese Government Bonds (JGBs) due to prospects of increased fiscal spending. Nonetheless, June headline CPI eased to 3.3% from 3.5% in May, which supported bond sentiment despite inflation staying well above the Bank of Japan’s 2% target.