Bonds In Conversation : Twin Valentine’s Special

The stars have aligned for both the English and Chinese Valentine’s day today, plus a full moon fever.

So I will share some money saving tips with you.

1. Oranges instead of roses as gift (using leftover mandarins from the lunar new year)
2. Oranges can be thrown into drain for the usual luck ritual but make sure you are not littering

Its been a mighty odd week with poorer data out of the US but status quo for the rest of the world, markets moving for all the wrong reasons except for a consensus that equities and EM have been oversold and momentum trading.

Golden tips taken from the BofAML investment strategy report (not for retail clients).

1.  Global Breadth Rule: MSCI AC World gained 11% in the three months after 96% of equity markets were trading below their 50 & 200-day moving averages. The recent market rally has moved us further away from a “buy” signal; watch the price action of European markets, as the majority are barely trading above their 50-dma.
Verdict : Contrarian BUY
2. Bull & Bear Index: S&P 500 gained 9.2% from the B&B trough on July 3rd to peak on November 5th. The B&B Index is currently at 4.2; look for it to break through 2.0 before adding significant exposure to risk assets.
Verdict : Contrarian BUY
3. EM Flow Trading Rule: Two days after EM equities troughed on June 24th, our EM flow trading rule gave a soft “buy” signal. EM equities gained 11% over the subsequent three months. $7-8bn EM equity inflows this week would trigger another “buy” signal.
Verdict : Contrarian BUY
4. Global Flow Trading Rule: Last week equity markets bottomed as we experienced the largest outflows ($28bn) from global equities in the history of our data (in absolute terms).
Verdict : Neutral
5. Global FMS Cash Rule: In 2013, Fund Manager Survey cash levels first breached the 4.5% “buy” threshold in July. Global Equities were up 10% from the beginning of August through the end of the year. Watch the Feb’14 FMS
next Tuesday (2/18) for contrarian trade ideas.
Verdict : Still BUY

It’s a screaming BUY which is not bad news at all for EM bonds and we can bet on a heavy issuance calendar coming up in the weeks ahead. No warning is bad enough even for Chinese property bonds which are up on the week and underperforming Indonesian high yields which are flying.

The euphoria is understandable. It is the first full moon of the lunar new year and I have little to add except to say have a happy Valentine’s, chinese and english both included.

Leaving you with the prices.

USD Bonds listed in SGX and Hong Kong.


SGD Bonds Issued in 2014.


2013 SGD Bond Issues