Kuala Lumpur:According to BERNAMA News Agency, Kenanga Investment Bank Bhd (Kenanga IB) anticipates that Malaysian Government Securities (MGS) yields will remain stable and within a certain range ahead of the release of significant economic data next week. The easing of geopolitical tensions is also expected to bolster market sentiment.

The investment bank noted that market attention is set to focus on upcoming data for the producer price index (PPI) and purchasing managers' index (PMI), as well as possible policy signals related to the forthcoming Budget 2027. Last week, foreign demand for Malaysian bonds was strong, with RM2.7 billion in net inflows, and foreign investors returned to Bursa Malaysia with RM127 million in net equity inflows, breaking a six-week trend of selling.

Externally, the markets are keeping an eye on labor and personal consumption expenditures (PCE) inflation data from the United States. The continuation of the US-China trade truce and ongoing negotiations between the US and Iran have contributed positively to global risk sentiment.

Kenanga IB also predicts that US Treasury yields will likely trend higher next week, influenced by the core PCE price index and significant US data releases. These include the US job openings and labor turnover survey, Automatic Data Processing (ADP) employment statistics, non-farm payrolls (NFP), the unemployment rate, GDP growth, and the Institute for Supply Management (ISM) manufacturing PMI.

The non-farm payrolls are expected to increase by around 100,000, while a 0.3 percent month-on-month core PCE print is anticipated to support the narrative of prolonged higher interest rates. Additionally, progress in US-Iran talks aimed at reopening the Strait of Hormuz could alleviate energy supply concerns and limit any further increase in yields.