Year: 2025
Type: article
Abstract: The COVID-19 pandemic has fundamentally altered investment strategies, particularly in bond markets. This study investigates the global determinants affecting Malaysian government bond yields, comparing pre-COVID-19 and pandemic periods using daily data from January 2017 to May 2021. Our findings reveal significant shifts in investor behaviour: during the pandemic, Malaysian government bonds exhibited equity-like characteristics, diverging from their traditional safe-haven role. This is evidenced by a positive relationship between bond yields and investor sentiment shocks, indicating bond sell-offs in response to heightened risk. Gold prices emerged as the most influential factor affecting bond yields, reaffirming gold's status as a safe-haven asset. The relationship between gold prices and bond yields became more pronounced during the pandemic. Despite investor sentiment significantly impacting gold prices, the Malaysian bond market was more influenced by gold prices than by global investor sentiment. This suggests that investors initially moved assets to gold before transitioning back to bonds during heightened risk periods. These findings underscore the need for investors to closely monitor gold prices and for policymakers to implement measures that enhance bond market stability during crises, ensuring better preparedness for future economic uncertainties.
Institution: Universiti Utara Malaysia
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7081980363
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