If you remember my last post on monetary conditions in Malaysia, I was scratching my head over the apparent dichotomy between a whopping increase in the supply of securities into the capital and money markets, while prices defied gravity. Turns out I spoke too soon:
Yields on MGS rose across the board, but especially for 2-yr to 3-yr maturities (which was where the bulk of the issuance in November occurred). And of course, January we've seen the KLCI falling back along with markets across most of the region. I'll call that little mystery now over.
Other interest rates however have been moving the other way - yields on BNM bills and T-bills have dropped slightly, and the average lending rate has fallen to just above 4.8% (an all time low, AFAIK). All of this of course came before the latest Monetary Policy Committee (MPC) meeting this week, which had language indicating that BNM might raise the OPR faster than the markets expect. Stay tuned for more on this subject.
There was little of note in terms of changes in the money supply situation, but there were some interesting things going on with BNM's balance sheet. There has been an injection of liquidity into the system the last couple months, though not anywhere near the scale of intervention in 2008:
Trump and the markets
2 hours ago