None till 12 April
USD/SGD barely budged on the week, compared to the movements in the JPY driving the NEER to 145 bp. This is not a good sign going into the MPS, which effectively rules out the potential of a tightening.
Thus we had the SOR spiking almost 4 bp higher into today’s fix above 0.4% again, a level not seen since mid March.
Flows on the week has been light with local banks slamming curve flatteners against some payers who were riding off the back of relative value plays vs the USD curve. The 2-10 flattened some 6 bp as a result.
My view now is that for any weakness in the SGD currency and even with a surprise announcement of weakening on Friday (from the 15% fall in JPY ytd), the impact would be short lived. The chances of SOR heading to zero in the future has increased considerably since last week and we note that BoJ’s program could stretch up to 5 years.
Bonds outperforming on BoJ, keeping pace with UST, in anticipation of a surge in inflows. Volumes suggest trading book positioning with the short end seeing great interest despite most issues under 09/2016 trading under 0.20%.
The big picture for bonds has become rosier, dampened only by casual ADB warnings of asset bubbles which is a good reason to load up on SGS. Because bubbles have to grow and the issuance calendar will be light for another 6 weeks till end May where we will have more bond supply in a 7Y reopening.
Swiber 4Y SGD 160 mio 7.125% SOR +650 bp
Goodpack Ltd 10Y SGD 50 mio 4.7% SOR+300bp