Bonds In Conversation : Scratching My Head on the12th of September

It’s the day after 11th Sept and the 13th anniversary of the Sep 11 attacks. We are still alive and markets are doing well except for those who have been whipped about by currency volatility, I would say the rest of the world is still living in relative bliss.

Commodity prices at new lows with WTI trading to a 1 year low. The ruble at a historic low, JPY at a 6 year low,

World events this week  ? Just too many to consider.

1. Scotland 18th Sept referendum which threatens UK’s economy
2. FOMC 18th Sept decision causing rumbles in the bond and currency markets
3. iPhone 6 launch along with iWatch and iCredit card
4. Alibaba IPO next week

And the world is still grappling with Ebola, ISIS, Ukraine, Israel and not to mention that 5 million Google passwords have been compromised.

Economic news all discarded, China ignored for their record trade surplus as markets all went on their own tangents without being able to pinpoint any particular source except for 1 glaring fact, that US rates are heading up and the USD is strengthening.

10Y UST YIELDChart : 10Y US Treasury yield

We are seeing a prolonged uptrend in 10y US yields that started last month and the DXY dollar index also at its 1 year high.


Asia is only held up by China and the JPM EM currencies index is back down it its March lows.

JPM EM Ccy Index

Yields are going up around the world from Turkey (+0.21%), Russia (+0.24%) to Switzerland (+0.06%). Singapore also saw a nice blip, closer to my target of 2.5% (, and 10 year gov bonds are giving 2.47% today.

world bonds

Some small iron ore miners are going bust as commodity prices tumble, Donald Trump’s casino is filing for bankruptcy, Radioshack is in distress and Venezuela is on the verge of a default.

Meanwhile in HK, the black market for the iPhone heats up although China’s demand may not be as forthcoming.

iphone prices

All these leaves me scratching my head real hard.

Because just this week, Citibank is advising clients to leverage up on junk bonds and Bill Gross is saying the same thing when Jeff Gunlach is saying that interest rates are heading higher.

As I mentioned yesterday in my post, Who’s Afraid of the Big Bad Fed ?, there is a noticeable trend of outflows from the retail HYG ETF, which is a junk bond etf in the US.

There appears to be a disagreement between retail and institutions on whether credits and junk are still in vogue, credit spreads are holding their ground and I am glad that Bloomberg produced this piece last night : Leveraged-Loan Boom Rejected by David as Goliath Buyers Jump In.

For the week, we had Hong Kong selling USD 1 bio of  its first sukuk bond and USD issues taking centrestage with UOB and ICICI in the 5 year USD senior bond space and HSBC doing Cocos in USD and EUR.

For the small ASEAN companies, S&P warns that their debt profiles would shape the credit risk more than growth trends would.

And I am all for that just as I have been bearish bonds for the past 2 months but it is not the rates that bother me anymore. It’s the credit and that is the head scratching bit.


Quiet week in Singapore except for the only issue today out of Viva Industrial Trust.

I cannot help but feel that we have too many of them these days.

Good luck !

USD Bonds Listed in SG and HK


SGD 2014 Bonds


SGD 2013 Bonds






Currencies are going a