Bonds In Conversation : War Games

 

An interesting observation from the recent wars is that they start in March.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08-2/20130828_war.jpg

https://i1.wp.com/www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/08-2/20130828_war.jpg?resize=431%2C693

So the west is going to war with Syria/Russia.

https://tradehaven.net/market/ad-hoc-commentary-the-many-short-term-benefits-of-restarting-the-cold-war-through-syria/

India is grappling with a currency war this week, new announcements daily with the latest being the window for USD for the state oil companies which led to a life time high close of 68.80 instead of the intraday high of 70.00.

http://www.marketwatch.com/story/indian-rupee-plunges-to-record-low-2013-08-28?link=sfmw

No signs of corporate distress anywhere even as issuance falls.

“Global corporate bond issuance at lowest level in five years. … putting it on course to be the weakest month since 2008” Source : FT

www.ft.com/cms/s/0/4e464782-0bfc-11e3-8f77-00144feabdc0.html

Investors are stockpiling instead of trading as banks withdraw liquidity from the market and secondary volumes fall. It is interesting to note that this phenomenon last occurred 2 months before the Lehman crisis.

A crisis looks remote at the moment. But an extended period of lagging growth is looking like the inevitable future. Nonetheless it does not make bonds a buy primarily because liquidity conditions are likely to fade back to normal as central banks realise the ineffectiveness of QE.

SGD Corporates At A Glance

Selling observed. Some bonds worse than the rest, in particular the perpetuals which were hit as banks’ bids vanished which probably saved theĀ  market from further losses because there is no one left to sell to.

Today we have Hiap Hoe 3Y coming at high 4%. Buyers better be buying to keep.

In any case, buyers be warned. Citi has just raised their risk free benchmark for S Reits evaluation to 3.1% from 2.2%. The repercussions on fixed income will follow through.

Leaving you with the prices which look like a mess to me and hardly reliable.

 

2012 BONDS