SGD Rates and Bonds Weekly


Economic News
3Q13 GDP -1% QoQ vs expected -4%
3Q13 GDP +5.1% YoY vs expected +3.8%
Aug Retail Sales Ex Auto +1.4% YoY vs expectec +2%
Aug Retail Sales -7.8% YoY vs expected -5.4%
Aug Retail Sales +3.6% MoM vs expected +4.5%


The monetary policy statement came as expected with the market caught in the US debt ceiling stalemate.

Rates tended towards selling mostly on risk off fears. The sentiments veering towards a slowdown ahead. The GDP numbers, whilst surprising on the upside and higher GDP guidance for the year, still casting doubt on the pace of future growth.

The only certainty would be the strong SGD for now which leads to expectations that rates would be capped for the time being with 6M SOR at a 12 month low of 0.28796% on 11 Oct.

Thus long end rates look quite vulnerable going ahead, barely clinging tot he 100 day moving averages and looking quite ready for a pull back once global uncertainty diminishes. We can take comfort that we will not be jumping from shutdown into taper immediately which will buy the market several weeks of soft rates.

The 6M fwd fwd chart.



SGS trading 2 steps ahead, along with UST yields, anticipating end of the shutdown. Volumes running thin with players holding on to their positions and clients sidelined after their purchases the week before and last month end.

Bonds are still supported with several attempts to rally during the week failing to find momentum. Yet selling has been very light to appear more for price discovery purposes.

The shorter week, with the public holiday today, saw some position lightening on Friday and a quiet Monday after the widely anticipated MAS monetary policy statement.

Would expect bond prices to remain well behaved unless the improbable US default arises which is still overall bond friendly and complementing the strong SGD policy.

Related article

 SGD Rates And Bonds Weekly ( 08/10/2013