USD/SGD 1.2470 (+0.0080) approx 119 bp Above NEER (prev 150 ABOVE).
6M SOR 0.44169-0.45032%
SGS Inflow Outflow (-5/+5) : +0.5
30Y SGS reopening. SGD 1.2 bio cut off 2.76% (exp range 2.75-2.80%)
MAS 28 Day Bill SGD 1.4 bio (unch) cut off 0.28% (-1 BP)
MAS 3M Bill SGD 2.8 bio (unch) cut off 0.29% (-2 BP)
SGS 3M bill SGD 2 bio (UNCH) cut off 0.27% (+5 bp)
SGS 6M bill SGD 2 bio (unch) cut off 0.28% (-1 bp)
Jan Ind Prod -9.2% MoM vs exp +2%. -0.4% YoY vs exp +5.2%
IRS : Market failed to contain the waves of selling after the Finance Minister confirmed that there would be no changes to the policy which was interpreted to be SGD positive and for lower rates to be tested again. The curve flattened massively led by offers in the 5y5y fwd which collapsed >15 bp on the week and saw no support despite some vain paying efforts out of local bank. The 5Y irs also suffered towards the end of the week on the force of better offers for rates to close the week unchanged to 10 bp lower.
Comment : Rates sitting on m.a. support levels and not inclined to resume any upwards momentum especially with the policy rhetoric we have been getting. SOR still holding as USDSGD drifts higher with a big spike today. That does not bode well for the short end rates despite heading into a benign policy meeting in April suggesting that investors are looking ahead into the horizon for the NEER. I would be cautious on overselling into the rally and keep the short end hedged as the street positioning continues to see steepeners unwound especially if USD/SGD breaks the 1.25 and 6mth high.
SGS : The 30Y auction took the wind out of the sails of the early rally that started last week. Bonds underperformed miserably after the auction which had a decent result, cut off at 2.76% (vs expected 2.75-2.80 range). Short end papers lost buying interest and corrected back to tbill levels. Market leant towards selling in the belly to long ends after the auction as latent demand failed to show up. Yields closed the week unchanged to 7 bp higher.
Comment : SGS yields were artificially resuscitated by the policy assurance out of Singapore and QE out of US. The prices holding together to close the month on a high note. Going ahead, bonds should be supported on safe haven concerns. Cannot see any other reason to hold SGS except to hold out for that black swan risk off event and of course, bond swap spreads starting to look attractive again especially from a carry perspective.
Posted in basis swaps, EXCHANGE RATE POLICY, SGD NEER, SGS, SGS TBILLS, SIBID, SIBOR, Sing Rates Editorial, SINGAPORE GOVERNMENT BONDS, singapore interest rates, SOR FIXING, USD/SGD | 2 Comments »
USD/SGD 1.2275(+0.0014) approx 111 bp Above NEER (prev 113 ABOVE).
6M SOR 0.47657-0.51105%
SGS Inflow Outflow (-5/+5) : +0.5
MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.22% (-1 bp)
MAS 3M Bill SGD 2.6 bio (unch) cut off 0.26% (-1 bp)
SGS 3M bill SGD 2 bio (UNCH) cut off 0.23% (+4 bp)
SGS 6M bill SGD 2 bio (unch) cut off 0.26% (-3 bp)
Nov Retail Sales -1.1% YoY vs exp -0.3%. -0.8% MoM vs exp +0.5%. Ex Autos +2% YoY vs exp +2.9%.
Dec NODX -16.3% YoY vs exp -7.6%. +1.8% MoM vs exp +4.5%. Electronics Exports -19.1% YoY vs exp -12.8%
IRS : Weak economic numbers and slew of corporate bond pricings polarised the market into the have vs the have nots. Banks not involved in the SGD 1 bio odd corporate papers that came out found themselves caught on the wrong side when the flows hit. Steepener plays took a hit with local bank doing a sudden reverse of their positions and capped rates towards the end of the week in the >5y tenors as the 6M SOR fixed in a lower range for the entire week on rumoured liquidity injections. Rates closed the week 1 to 6 bp lower, on a flatter curve.
Comment : The shocking NODX numbers has revived some calls for a technical recession for the country along with the property cooling measures. SGD is still holding on to its NEER level on the week although it remains to be seen if there will be an outflow into month end on the country’s population white paper proposal, a by election and the 2013 Budget next month. Having said that, steepeners still make sense given that the short end will continue to be “managed” and carry remains positive. Risk of the long end susceptibility deal pricings should not be ignored but overall market positioning appears light. The uncertainty will add to market volatility in the coming weeks and I will be looking to reduce exposure to a minimal.
SGS : Govis took second stage in throughout the week with the focus much on the new corporate issues and pipeline. Yields were content to drift along with the swaps without much trades going through except for early in the week where local bank was seen buying in the belly – 2019 to 2021 tenors. Rest of the week saw better offers and weak longs exiting for yields to close the week unchanged to 4 bp lower, on a flatter curve.
Comment : Prices still supported by small pockets of safe haven demand. Market players getting impatient as USDSGD continues to grind down the NEER (weaken vs basket) which is does not say much for bond demand. Would continue to expect weakness in the coming weeks as corporate bonds continue to steal the limelight.
Market wrangling masks the relative calm numbers on the screen. Week opened with offering interest on the back of corporate deal issuances but hungry local bank wrestled prices back to normal.
HONG FOK PROPERTIES 5Y SGD 100M SENIOR 4.75% SOR +385 BP ~ swap neutral
NATIONAL UNI OF SINGAPORE 5Y SGD 250M SENIOR Aaa 1.038% SOR+12.8 BP 2.
UNICREDITO SPA LT210.5Y SGD 300M LT2 Baa3 BBB BBB+ 5.500% SOR+462 BP ~swapped into USD or EUR 3.
GUTHRIE GTS LIMITED 5Y SGD 125M 3.700% SOR+281 BP
BIOSENSORS INTL 4Y SGD 300M SENIOR 4.875% SOR+412.5
Posted in basis swaps, MAS BILLS, SGD NEER, SGS, SGS TBILLS, Sing Rates Editorial, Singapore Corporate Bonds, SINGAPORE GOVERNMENT BONDS, singapore interest rates, SOR FIXING, USD/SGD |