Singapore : 10Y yield, STI and USDSGD

Current levels :

10Y SGS 2.51%
USDSGD 1.2510
STI 3115.86

It looks like this.

sgd 10y sgs fssti

The historical correlation between the STI and the USDSGD is very strong and negative, along with the 6M SOR fixing. The higher USDSGD and higher interest rates, the lower the STI.

The 10Y SGS correlates better with GDP in that, higher yields equate to higher GDP growth.

In the last 12 months, we find new and stronger correlations emerging.
1. STI with the 10Y bond yield, a negative correlation
2. USDSGD and the 10Y bond yield, a positive correlation

It would appear that the market is paying more attention to long end rates and trading the blue chips (dividend return) versus bonds.

The USDSGD has become a laggard against the stock market because policy has appeared to have taken a back seat as the government pursues qualitative measures to tackle asset inflation against a stable CPI.

We are seeing a new uptrend in the 10Y yield again and stocks have reacted little as trading volumes wane and the stock market is plagued by small cap stock scandals.

What to expect :

1. USDSGD 1.2620 near term.
2. FSSTI 3050 near term.