The investment bank attributed the anticipated uptick in yields to stronger-than-expected Industrial Production Index (IPI) data and stable employment figures.

According to the statistics department, Malaysia’s IPI grew by 5% year-on-year in June 2024, marking six consecutive months of positive momentum, primarily driven by sustained growth in the manufacturing sector.

“Our outlook will be further supported by the upcoming release of the second quarter 2024 Gross Domestic Product (GDP), particularly if it exceeds the statistics department’s estimates,” Kenanga IB said in a statement.

It noted that improvements in US economic data, including robust Institute for Supply Management (ISM) services figures and a decline in jobless claims, have led to higher local yields, indicating a modest shift in investor risk appetite.

“Nevertheless, the domestic bond market continues to attract inflows, with foreign investors purchasing RM1.9 billion worth of Malaysian debt this week,” it added.

Malaysian Government Securities (MGS) and Government Investment Issues (GII) yields showed mixed movements this week, ranging from (-3.7) basis points (bps) to 5.6 bps overall.

The 10-year MGS rose by 5.3 bps to 3.762%, while the 10-year GII increased by 5.6 bps to 3.778%.