SGD Rates And Bonds Weekly

SGD RATES WEEKLY

Economic News
3Q Final GDP +1.3% QoQ vs expected -0.3%
3Q Final GDP +5.8% YoY vs expected +5.3%
Oct CPI +0.2% MoM vs expected +0.2%
Oct CPI +2% YoY vs expected +2.1%
Oct Industrial Production 0% MoM vs expected +1.4%
Oct Industrial Production +8% YoY vs expected +9.3%

IRS

Quiet enough week. Massive steepening in the curve in the absence of liquidity providers. The 6M SOR fixed to a new 1 year low on the anniversary of its 1 year high despite CPI coming out well under control and GDP surprising to the topside.

I have my reservations that rates will go much lower from here even if the Eurozone embraces the idea of negative rates even as some countries are already in deep negative real interest rate zone.

I did not glean anything new from all the 2014 outlook reports. All outlooks for next year are for an unchanged MAS policy and growth to remain on course which is typical for all Singapore outlooks.

The move down in the short end could prove to be a dire warning of a potential break out in the long end with the 10Y irs which is the only part of the curve the market seems more sure of, that rates will be higher eventually.

I am wrong about the short end pay idea so far but perhaps the game is not over yet.

SGS

One of the lowest volumes we have seen in a while. Bond market in deep freeze and ignoring the volatility in the US treasuries.

It looks like a quiet month end given the lack of major SGS issuance and players quite content to sit on their light holdings.

It is hard to see any overwhelming reason to load up on bonds going ahead into year end or even positioning for a rally next year. Thus, quiet it will be and any moves will be instigated by the investment books (like I have said before) and that information would be a closely guarded insider secret. But if history is anything to go by, it would be in the form of lightening.

Not bullish at all.