MARKET TALK: Malaysian Govt Bonds Mixed; 15-Year Tender Wed Eyed

Malaysian government bonds are mixed in subdued trade as investors await results of the MYR3.00 billion March 2027 MGS auction Wednesday. A local trader says the central bank's recent monetary policy statement suggests increasing focus on inflation and "some investors have recently begun to fret about high oil prices that could trigger inflationary pressures especially if its due to supply disruptions on rising tensions in the Middle East rather than underlying demand," says a local trader, who notes the 1-3 bps weekly rise in yields across maturities. "Inflation would be closely watched going forward and any signs of further rises would not bode well for local bonds," says the trader; for Wednesday's tender, the issuance will likely see a bid-to-cover ratio of around 2.0X. The yield on August 2014 MGS is down 1 bp at 2.94% while September 2016 MGS yield is up 2 bp at 3.24%. The September 2018 MGS yield is flat at 3.41%.