BONDS IN CONVERSATION : SEEING STARS

It seems that Greece has 4 more days but they keep saying that anyway as the ECB continues to pump emergency funds into the country and we know that missing their IMF repayment next week does not constitute a default.

I am not sure what this week has been about, really, between Greece and China and the month end or half year book closing on 30 June. It is all a matter of time, I suppose, like we said last week “The only certainties we have will be that it is only a matter of time before interest rates go up, Chinese stocks valuations will correct and another default occurs.” https://tradehaven.net/market/bonds-in-conversation-a-matter-of-time/

The 10Y US treasury yield did break higher as the charts had suggested with the 50 day moving average finally crossing the 200 day and does look like it has found a new comfort zone between 2.25-2.5%.

And the Chinese stock market correction continues in ugly gaps and today we saw 770 of the 1,105 stocks on the SHCOMP hit their limit-down. http://www.ft.com/intl/fastft/350781

I think many are seeing stars although not quite like what I have been doing, monitoring the Jupiter and Venus conjunction which will take place on 30 June. http://www.slate.com/blogs/bad_astronomy/2015/06/16/jupiter_and_venus_close_approach_on_june_30.html

 

I remain bearish on bonds, with no long term view. Turnover is falling and bond trading revenues on Wall Street are plunging. http://www.zerohedge.com/news/2015-06-21/bond-trading-revenues-are-plunging-wall-street-and-why-it-going-get-worse

 

Big banks have been tightening the reins on their trading activity as new rules continue to suffocate business but they simply pass the buck to the investors and some ETFs and funds have grown so big, there will be no exit when the time comes. http://www.bloomberg.com/news/articles/2015-06-21/the-3-words-that-count-in-bonds-liquidity-liquidity-liquidity

 

Another headline this week on a $140 bio bond fund that is turning to cash as it braces for a bond market collapse.

 

So, I would not hold my breath for a Greek deal because it is only a matter of time before the sun sets and we shall see stars before our eyes.

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Lots of developments in Asia and Singapore this week. We have Noble in the headlines with their substantial shareholder, China Investment Corp, standing by them. And we have Keppel and Sembcorp allegedly involved in a bribery scandal in their Brazilian dealings. Then we have Ezra managing to pass through a rights issue and a convertible bond plan that would allow them to redeem their bond maturities.

Chinese Shanshui US bonds got a boost this morning as their chairman may not need to step down (so no breach of covenant and no default).

The Ezra news led to some re-pricings on the O&G names with some higher and others lower. I would remain nimble and discerning even as PB appetite returns in the HY sector.

Interesting bonds we saw too in new issuance space – Singtel, Baidu, Bank of China and  China Life Insurance  which saw good demand.

Not so good was today’s Singapore 5Y government bond auction which saw poor appetite and a surprisingly long tail cut off at 2.03% when 1.9-1.95% was expected. The most liquid of bonds spurned seems a little odd to me and I would be seeing stars if I was not bearish this week. https://tradehaven.net/market/fx/singapore-rates-weekly-vol-addicts/

Leaving with the indicative prices.

USD Asian Bonds

2015 SGD Corporate Bonds

SGD 2014 Corporate Bonds