Kuala lumpur: Foreign inflows into Malaysian government bonds totaled RM11.1 billion in August, according to Kenanga Investment Bank Bhd (Kenanga IB). Foreign investors became net buyers of Malaysian government bonds, with a notable RM11.1 billion of inflows in August, and RM5.6 billion of that occurring in the final week of the month, as reported in the Bond Market Weekly Outlook.

According to BERNAMA News Agency, Kenanga IB observed that Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields increased across the curve, ranging between 1.3 basis points (bps) and 11.1 bps. The 10-year MGS yield rose by 11.1 bps to 3.985 percent, while the 10-year GII yield increased by 10.1 bps to 3.953 percent, with the sell-off primarily concentrated in the seven- to 10-year segment.

External factors significantly influenced these movements. Cautious statements from US Federal Reserve chair Kevin Warsh at the Jackson Hole symposium moderated expectations for imminent Fed rate cuts. Concurrently, rising tensions between the United States and Iran led to increased yields on front-end US Treasury securities and elevated oil prices.

Kenanga IB highlighted that domestic factors had a less pronounced impact, noting Malaysia's manufacturing Purchasing Managers' Index, which decreased to 50.2 in August from 50.7 in July. Additionally, Bank Negara Malaysia maintained the overnight policy rate unchanged for the seventh consecutive Monetary Policy Committee meeting. The local market closed before the release of US payrolls data, implying that the MGS curve has yet to adjust for the results.