Malaysian government bonds have strengthened significantly in recent months. Bond markets staged a sharp recovery after the sell-off in March 2020, and yields have since fallen to record lows. The rally in bond markets was driven by multiple factors, notably, slowing inflation, monetary easing and increased liquidity, narrowing CDS spreads, recovery in foreign demand, and subdued supply. However, some of these factors appear to be turning less positive for bond prices. The upcoming review of the FTSE Russell’s World Government Bond Index and the potential rise in supply in the coming months add to the uncertainty around the outlook.
Market Insights