Payrolls beat, but CPI decides: September Fed call sets the curve
Malaysian Government Securities (MGS) and Government Investment Issues (GII)
- Yield Movement: MGS and GII yields rose across the curve, up between 1.3 bps and 11.1 bps. The 10-Y MGS yield rose 11.1 bps to 3.985%, and the 10-Y GII yield rose 10.1 bps to 3.953%. The selloff was concentrated in the 7-Y to 10-Y segment.
- Key drivers: External rates led the move. Cautious remarks from Warsh at Jackson Hole tempered expectations for near-term Fed rate cuts, while escalating US-Iran tensions lifted front-end UST yields and oil prices. Domestic factors mattered less: the Manufacturing PMI eased to 50.2 in August (Jul: 50.7) and BNM kept the OPR unchanged for a seventh consecutive MPC meeting. The local market closed before Friday's US payrolls release, so the MGS curve has yet to price in the beat.
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