1M 0.178
3M 0.2754
6M 0.4049

SIBOR has been breaking their 6 year highs daily as SOR eased off on the week as the SGD dollar stabilised in the NEER basket.

The 7Y bond reopening auction on 27 Mar flopped immediately after. Who would fault it when its yield was 2.45% a week before the auction only to be chased enthusiastically by a local bank buyer to 2.19% ?

7y sgs auction

Well, the SGS rally coincided rather aptly with MAS’s retail market initiatives announcement for Singapore Savings Bonds, ETFs and fund management.

Economic News

Feb Industrial Production MoM +4.1% vs expected 1.3% (prev -4.7%)
Feb Industrial Production YoY -3.6% vs expected -2.2% (prev +1.3%)

I expect that the market will be quiet into the MAS semi annual Monetary Policy Review. The expectations are for a re-centreing but some analysts are starting to have second thoughts about it given the Fed’s stance in their recent speeches.

The USDSGD has come off strongly for 2 weeks running and I doubt we shall be seeing new highs into the 10-14 April where the Monetary Policy Statement will be released along with the 1Q15 GDP numbers.

usdsgd weekly

Should the MAS decide to do nothing about the SGD NEER, we could see some positions unwind and the USDSGD pull back to 1.35-1.36 before the crowd rises up to challenge her again on the next deflationary print we see.

In that case, we could see some curve steepening occur and bond swap spreads to widen out.

I believe the continued rise in SIBOR has been beneficial to banks as they milk the margins on the loans and a precaution against the loss of deposits to come if the Savings Bonds and ETFs take off.

MAS has finally arrived to the aid of the small depositors who cannot benefit from the higher SIBOR for their 500 dollar accounts because the deposit rates are still at near zero while larger fixed dep accounts benefit from banks’ promotional rates. And I have been wondering where did SIBID go to for the past decade ? (and between my friends and I, we know that SIBOR only exists for loan pricing)

We shall see the very first SGD mini bond announcement tomorrow, 1 April. The mini bond is another new initiative by the MAS announced last year which will allow an ad hoc bond to be re-opened according to market demands rather than a pre-set tenor decided in advance.

The auction date would be on the 21 of April and public participation is permitted.

There is also chance that MAS will not carry out this auction which is a good sign for bonds.

Will keep readers posted.

Good luck !