KUALA LUMPUR, Sept 28 (Bernama) -- Bursa Malaysia ended marginally lower on Monday amid selling activity as the market lacked fresh catalysts to spur investors’ buying interest, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 1.60 points, or 0.09 per cent, to 1,670.02, from Friday’s close of 1,671.62. The benchmark index, which opened 0.93 of-a-point higher at 1,672.55, moved between 1,668.61 and 1,674.11 throughout the trading session. Market breadth was negative as losers surpassed gainers 748 to 388, while 517 counters were unchanged, 1,271 untraded and 91 suspended. Turnover slipped to 3.11 billion units worth RM2.40 billion from 4.07 billion units valued at RM2.69 billion on Friday.
Key Highlights:
Treasuries Rally as Rate-Cut Bets Strengthen:
- Yields on two-year notes, sensitive to Fed policy changes, dropped 7 basis points to 4.08%.
- Traders are now pricing in 80% odds of a quarter-point rate cut at the Fed's December meeting, up from 67% earlier this week.
November Jobs Data - Mixed Signals:
- Job creation rose to 227,000 (above the 220,000 forecast).
- The unemployment rate edged up to 4.2%, reflecting a moderating labor market.
- Wage growth increased by 4% year-on-year, slightly above expectations.
Market Reaction:
- Traders responded with record activity in short-term interest-rate futures, betting heavily on a December rate cut.
- University of Michigan consumer sentiment hit an eight-month high of 74.0, with one-year inflation expectations rising to 2.9%, the highest since July.
Economists’ Insights:
- "Goldilocks zone": Kevin Flanagan of WisdomTree said the data reassured investors by being “not too hot, not too cold.”
- Fed’s Approach: Economists expect the Fed to cut rates by 25 basis points in December but pause further cuts early next year unless inflation slows meaningfully.
Upcoming Key Data:
- November inflation data (due next week) will be crucial in shaping the Fed's December decision.
- The Consumer Price Index (CPI) growth rate edged higher in October to 2.6%, with core inflation steady at 3.3%.
Fed Officials' Commentary:
- Fed Governor Michelle Bowman emphasized caution in lowering rates due to "uncomfortably" high inflation.
- Chicago Fed President Austan Goolsbee highlighted the labor market's sustainability but refrained from committing to a December cut.
Broader Implications:
- Analysts, including JP Morgan’s Priya Misra, believe the data supports the soft-landing narrative and explains why risk assets remain stable despite rate uncertainty.
- The "pause-and-skip debate" for early 2025 now becomes a key market focus as rate cuts for next year remain speculative.
Inflation Target Challenges:
- Chair Jerome Powell has warned of a bumpy road to the 2% inflation target. Sticky inflation readings could complicate the Fed's path forward.
Conclusion:
The latest jobs data aligns with market expectations, keeping hopes alive for a December Fed rate cut. However, the path forward depends on inflation data and evolving economic conditions, with policymakers treading cautiously to balance growth and inflation.
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