KUALA LUMPUR, April 17 — Foreign investors demonstrated renewed confidence in the Malaysian bond market in March, pouring in a net RM6.1 billion in the strongest monthly inflow seen in 10 months, according to RAM Ratings.
In in its Bond Market Monthly April 2026, the firm said this surge completely reversed a RM2.5 billion outflow from February and came despite significant global market turbulence driven by geopolitical tensions and shifting US interest rate expectations.
The recovery was largely fuelled by strong demand for Malaysian Government Securities (MGS), which attracted RM5.1 billion, and conventional corporate bonds, which saw an inflow of RM2.8 billion.
This influx occurred against a backdrop of severe volatility in global bond markets. A sharp escalation in the Middle East conflict during March triggered fears of an oil-driven inflation shock, leading to a major repricing of US interest rates.
Volatility in US Treasuries, as measured by the MOVE Index, climbed to an 11-month high, while the 10-year US Treasury yield spiked to a peak of 4.44 per cent on March 27, up from 3.97 per cent at the end of February.
As a result, market expectations for near-term rate cuts by the US Federal Reserve evaporated, with sentiment shifting firmly towards a “higher-for-longer” interest rate environment.
According to CME FedWatch data, the probability of the Fed holding rates steady in its upcoming April and June meetings soared to 99.5 per cent and 98.0 per cent, respectively.
The upward pressure from US Treasuries was felt in regional markets, including Malaysia. The yield on the 10-year MGS rose by 14.4 basis points month-on-month to end March at 3.66 per cent.
Looking ahead, market stability will likely hinge on geopolitical developments in the Middle East, particularly the outcome of US-Iran negotiations and the resolution of oil supply concerns.
Bond yields have shown some moderation in early April, with the 10-year MGS yield standing at 3.61 per cent as of April 16.
Date: 17 April, 2026 7:00 pm
Source: Malay Mail
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