SINGAPORE WEEKLY : TO READ INTO IT

How do we read into things ?

*S&P REVISES ECO RISK TREND IN SINGAPORE BANK SECTOR TO POSITIVE
*S&P: 1 IN 3 LIKELIHOOD ECON. RISK IN SINGAPORE WILL IMPROVE

Positive is a good word until you realise it means there is a 2 in 3 likelihood that economic risk will NOT improve.

Or into law abiding CEOs’ comments ?

*Singapore Property Outlook to Improve Longer Term, OCBC CEO Says

*DBS CEO SAYS SINGAPORE SAVINGS BOND RATE ‘A DISTORTION’

ECONOMIC NEWS AND DATA

JUN CPI -0.1% MoM expected 0%
JUN CPI -0.3% YoY expected -0.3%
JUN Core CPI +0.2% YoY expected +0.1%
JUN Industrial Production -3.3% MoM expected +1.7%
JUN Industrial Production -4.4% YoY expected -0.4%

USDSGD broke a 3 month high last week but strengthened against the NEER basket, thanks to everything else weakening except for the G3 – EUR, USD and JPY.

US Libor Fixings
1M 0.189
3M 0.2941
6M 0.46895

There is a huge case for the secular stagnation story now with no more China’s love affair with the iPhone or e-commerce to save us this time and Asia ex-China is not looking good at all.

Equity Performance YTD

Singapore -2.09%
Malaysia -2.83%
Thailand -5.76%
Indonesia -9.46%
Taiwan -7.79%

vs Euro Stoxx +11.65%, S&P 500 +0.42% and Nikkei +16.96%

The slow growth and low inflation scenario does not really sit well with Singapore as I had pointed out in Jan 2014 – https://tradehaven.net/market/why-higher-inflation-is-good-for-singaporeans/ – and thus the elections is timely because it does buy us a couple of months relief off market scrutiny given that Malaysia is heading for some form of high noon political  showdown which is one of the main reasons we have to trade USDSGD from the long side. Note that USDIDR and USDMYR are both at their highest since 1998.

I feel that the USDSGD is not to be confused with the SIBOR or SOR this time as I have been echoing for the past 2 months simply because our curve has overreacted in the earlier half of this year and shall probably outperform from here.

Checking on the 1 year performance of the bond market.

And the difference between the US and SG govt bond curves.

The belly (5Y) looks like the sweet spot as I has pointed out yesterday given the near curve inversion we are seeing in the 20-30Y and that our 5Y swaps are at 6 year highs versus global credit spreads that look poised for a break upwards. https://tradehaven.net/market/the-secular-stagnation-reality-revisited/

 

I would not read too much into those feel good articles that appear encouraging for investors to buy Singapore junk bonds (which I intend to look into later on) and in fact, most market professionals got highly confused reading it midway which means retail folks are just going for the headlines. http://www.businesstimes.com.sg/banking-finance/singapore-junk-bonds-gain-twice-indonesia-as-millionaires-find-haven

Have a nice week ahead and read wisely !