Global Bond Markets   

Government bonds rallied on both sides of the Atlantic in January as easing inflation momentum renewed hopes of less aggressive monetary policy tightening by central banks. In China, relatively lower CGB yields became less enticing to investors as yields on developed economy bonds are expected to peak soon.

Local govvies, which joined the major government bond rally, ended on a stronger note in January. Demand for local govvies remained supported by optimism over the Malaysian economy following China’s reopening. The continued easing of domestic consumer price growth also boded well for local govvies.

January saw relatively muted issuance activity in the local corporate bond market. Gross issuances came in at RM4.9 billion, roughly unchanged compared to a year ago but significantly lower than December 2022’s RM43.8 billion. All segments recorded declines except for the quasi-government segment.

The local bond market saw net foreign buying of nearly RM500.0 million in January, which ended four consecutive months of net outflows worth a total of RM8.6 billion. Notwithstanding January’s net foreign inflow, foreign holdings of local bonds as a percentage of total outstanding slid to 13.1% (Dec: 13.2%) due in part to higher net issuances of government bonds.