SGD Rates and Bonds Weekly


Economic News
Apr PMI 50.3 vs expected 50.3 previous 50.6
Apr Electronics Sector Index 51.2 vs expected 51.3 previous 51.9


Market still in the doldrums as trading interest remains anemic. USDSGD broke under 1.23 briefly before holding the level as it has been for the past week with some talk in the market that the JPY weight in the SGD Neer was reduced recently.

Long end rates bounced back strongly from their 7 months low last week after the buoyant US NFP and Malaysian election results. Paying interest concentrated in the long ends, while the 6M SOR fixed in a tight 0.38-.0.39 range.

The curve steepening is healthy and in line with the new highs attained in the STI Index which is trading at its highest since 2007. The strength of the equity market has been ignored by the rate world in a twin market rally which begs the question on how long the situation will remain sustainable.

As the complacency continues, I suspect we could see another leg down in rates with the moving averages crossing to the downside which is quite pointless to play for given the illiquidity in the marketplace. That dip should present decent paying opportunity, on the other hand relative to the USD curve.


Month end rebalancing kept market busy earlier in the week with local banks all seen on the bids for the 5Y and the long end 20-30Y papers. Signs of offshore buying also emerging in the 5Y tenors.

Market sold off fast led by another local bank into the US numbers on Friday and thereafter causing yields to rise along with the UST yields. The 10 and 15Y SGS, worst performers after hitting their lows for the year earlier last week when the STI broke its 5 year high.

The sharp and sudden spike in yields is approaching resistance levels. By that I mean the sudden plunge at the end of March when yield collapsed. Still no reason to see a rush for the exit as yet given weak global economic outlook and calls for a prolonged era of low rates. Thus it would be prudent to be on the lookout for buying opportunities going ahead.

Corporate Bonds

Guocoland 7Y SGD 125 mio 4.1% SOR+295 bp ~ swap neutral
Trikomsel 3Y SGD 115 mio 5.25% SOR+475 bp ~ potential swap into USD