SGD Rates and Bonds Weekly
Economic News
Sep Electronic Exports -5.5% YoY vs expected +0.2%
Sep Non Oil Domestic Exports -1.2% YoY vs expected -2.8%
Sep Non Oil Domestic Exports +5.7% MoM vs expected +2.6%
IRS
Interest rates predictably lower on the week, easing along with US treasuries after the shutdown was interrupted.
Seller galore in the 5Y on confidence in the Fed and low rates to stay. The 5Y and above tenors saw heavy selling to break under the 100 day moving averages comfortably and head down towards the next support in the 200 day. Local bank seen on the bid which provided some support for swaps to underperform bonds and bond swap spreads widened on the week.
Data from portfolios show overwhelming longs built in the SGD along with other regionals suggesting that fund flows will continue for the time being. This bodes well for further weakness in SGD rates and we can expect to see further selling into the FOMC this month end, after the US data releases get out of the way, starting with the non farm payrolls tonight.
The 6M fwd fwd chart.
SGS
Market in hunting mode on thin volumes. Yield rally took place mid week to weekend on possible short covering trades with some trading books taking the opportunity to take profit. The most active tenors were the 8-10Y.
The SGS auction calendar for 2014 was released last Friday without much fanfare. Short commentary here, Through The Looking Glass – SGS Auction Calendar 2014.
It would appear that the market is not in a hurry to buy too many bonds at current levels even as interest rates look set to be capped for the time being.
Yet given the inflows into the SGD currency, we should see bond prices supported at least. Equity strength is a major cause for concern and whilst the short term view would be for a rally, any medium term view should ideally wait for the FOMC.
Related article
SGD Rates And Bonds Weekly (tradehaven.net) 15/10/2013