Scoop on Malaysian budget, bonds and FX rally

Reuters got its hands on the Malaysian budget figures on Oct. 23, one day before the government delivered them. Prime Minister Najib Razak planned to shave the equivalent of two percentage points of GDP off the deficit, taking it to 5.5 percent of GDP. Analysts polled by Reuters had expected a deficit of around 7.5 percent of GDP. The Reuters report immediately moved the bond market, causing a curve flattening trade and fed into ringgit trading the next day. Ratings agencies Moody’s and Fitch paid Reuters the rare compliment of announcing their reaction to the budget before it was announced. The exclusive was not only first, it captured the story perfectly, explaining that while the defict target was a step in the right direction, the government needed to explain how it would get there. In fact the next day Prime Minister Najib failed to add to the story in any appreciable way, repeating all the key figures and doing little to flesh out the specifics of the defict cutting plan.