SGD Rates and Bonds Weekly


Economic News
May CPI +1.6% YoY vs expected +1.7%
May CPI +0.4% MoM vs expected +0.3%


Chaos with Singapore melting down along with the rest of the world in a unprecedented move that will be remembered for a long time. Gapping rates saw very little in terms of volume.

SOR remained well contained fixing at a 4 week high of 0.40106% today which kept the short end 1 and 2Y capped. But the rest of the curve rose along with the SGS sell off into the new 10Y SGS auction tomorrow.

The SGD curve has reacted to a global risk off move and hazy conditions which will purportedly dampen the near term economic outlook. Such moves in the past 10 years have often been accompanied by massive volatile retracements and painful tests to the top side. The SGD curve has surpassed the US curve in its reaction and it does not pay to ignore the new trend.

SGD 10Y IRS Curve

My call was to be paid but I would take a neutral stance now given the new probabilities involving a global capitulation into a crisis. In the unlikelihood, but nevertheless still a likelihood, of the event, the safe way to play out would be to be slightly paid in the SGD or a long USD/SGD hedge against the received positions in rates.

The USDSGD has entered a new trading range which calls for caution in positioning. Best to wait till the half year closing is over before reassessing the trend.


A blue moon event in the SGS took the entire market off guard. Market had no time to take stock as the waves of selling hit concentrating in the 10Y sector where a new issue is to be auctioned off tomorrow. The auction announcement together with the regional meltdown saw SGS underperform irs yet again which was beyond anybody’s guess.

USDSGD broke the 1.28 handle, a level not seen since Jun 2012, in a breathtaking move which added to market panic. Shorts building into the auction which, at a size of SGD 1.5 bio net to the market (MAS taking 300 mio), is considered relatively small compared to the maturity of 6.2 bio on 1 Jul 13.

Would be inclined to believe the auction will be successful on the account that yields have gapped up >60 bp on the week and we can look forward to a coupon of closer to 3% which we can expect the CPF ordinary account to be benchmarked against asssuming that the yield level holds.

The 3% handle would be a level not seen in almost 5 years for a 10y issue.

And for the old fans, I managed to update the 6M fwd fwd chart for the SGS and IRS.

Some points look quite meaty.