weeklyUSD/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)

Economic Data

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.



USD/SGD 1.2390 (-0.0009) approx 150 bp Above NEER (prev  124 ABOVE).

6M SOR 0.44699-0.4748%

SGS Inflow Outflow (-5/+5) : +2


MAS 28 Day Bill SGD 1.4 bio (unch) cut off 0.29% (-1 BP)
MAS 3M Bill SGD  2.8 bio (unch) cut off 0.31% (-4 BP)
SGS 3M bill SGD 2 bio (UNCH)  cut off 0.22% (- 6 bp)

Economic Data

4Q12 GDP +3.3% QoQ vs exp +2%. +1.5% YoY vs exp +1.2%

IRS : QE came in the form of MAS assurance that there will be no currency war on the shores of Singapore. SGD moved up on the NEER and bonds took a big leg up from it. The swaps sold down in a very illiquid marketplace on paid positions unwinding and establishing new flattening received positions vs other regional curves. 6M SOR keeping to its unchanged range as authorities kept liquidity in the system flushed. Rates closed the week 5 to 11 bp lower on a flatter curve.

Comment : Singapore budget announcement today is likely to restrain growth in the short term while restructuring to higher wages which spells strong currency and low rates. After 16 years, I still have trouble getting my head around that concept. The >5Y rates are still holding above the 50 day m.a. trendline which will provide support in the near term. The short end remains vulnerable to currency war inflows for the SGD appreciation story which is again hard to comprehend in the face of ebbing growth. Important message to hang on to for now is not to expect higher rates or a weaker currency.

SGS : A market possessed by animal spirits drove the Apr 13 yield to a lifetime low of -0.19%, the Oct 14 at -0.07% and the Apr 2016 at 0.19% while 1M – 6M bills were auctioned well above 0.2%. Clearly market is caught short above the repo window SGD 50 mio lifeline. The long ends rallied despite the 30Y reopening auction announced slightly above market expectations at SGD 1.2 bio to be auctioned tomorrow. Heavy volumes went through throughout the week with Thursday topping SGD 1 bio in turnover in a mad grabbing game. Yields closed the week 9 to 12 bp lower.

Comment : While SGS are rallying, corporate bond issuances are lagging behind, the market run rate slowing considerably from the same period last year. Market spending a lot of time speculating on the source of the demand which has been speculated to originate from “invisible” sources that are way beyond trading book scale which frightened primary dealers to cover shorts in a hurry. The 30Y auction tomorrow is likely to throw a spanner in the works of the rally if the year to date market action is anything to go by. Yield range for the 30Y expected at 2.75-2.85%. My personal comfort zone would be something nearer to the 3% handle without feeling excessive regret in the future.


USD/SGD 1.2399 (+0.0013) approx 124 bp Above NEER (prev  87 ABOVE). 

6M SOR 0.4439-0.48509%

SGS Inflow Outflow (-5/+5) : -4


7Feb MAS 28 Day Bill SGD 1.4 bio (+200) cut off 0.27% (+2BP)
7Feb MAS 3M Bill SGD  2.8 bio (+200) cut off 0.27%  (-1 BP)
8Feb SGS 3M bill SGD 2 bio (UNCH)  cut off 0.26% (- 2 bp)
14Feb MAS 28 Day Bill SGD 1.4 bio (+200) cut off 0.3% (+3BP)
14Feb MAS 3M Bill SGD  2.8 bio (+200) cut off 0.35%  (+8 BP)
18 Feb SGS 3M bill SGD 2 bio (UNCH)  cut off 0.28% (+ 2 bp)
18 Feb SGS 6M bill SGD 2 bio (unch)  cut off 0.29% (unch)

Economic Data
Dec Retail Sales -1.5% YoY vs exp 0.2%
Dec Retail Sales -0.9% MoM vs exp +0.6%
Dec Retail Sales Ex Autos -0.4% YoY
Jan NODX +0.5% YoY vs exp +3%
Jan NODX -1.8% MoM vs exp +9.7%
Jan Electronics Exports -5.6% YoY vs exp -0.5%

 IRS : Strict policing led to lower rates but nothing short of a Singapore QE can save the bonds. General sentiments towards paying in the past 2 weeks in a quiet marketplace. The short end heavily capped up to 2 years as the SOR was managed lower on ample liquidity. Rates saw better selling after the holiday on suspected offshore deal pricings to close the fortnight 2 to 4 bp lower.


Comment : Artificial resuscitation dragging on as interest wanes. The playing field is shrinking with spurts of activity on each new deal. Weak economic data does not seem to be affecting the USD/SGD which leads us to wonder if the global currency war will lead to a G3 currency world, with the rest just dragged along as audience. Despite the market outlook for higher interest rates, I would hestitate to call a one way street in SGD. Between the heavy handed authorities and the offshore deal flows controlled by a few banks, I believe we will have some volatility ahead as parties get impatient for profits. In conclusion, stay neutral in the swaps.


SGS : Long bonds continued to slump as market shorts increase, the 15Y SGS being the only exception, rallying along with the short end 2Y SGS. The 2Y SGS vs tbill disconnect widened with the new 2Y bond steadfast while bills showed little demand in the auction, coming out at 0.3% (1M) and 0.35% (3M) for the MAS auction last week. Flows not particularly interesting other than the fact it is one way.Yields underperformed again to close the fortnight -1 to +5 bp changed, most levels at their 7 mth highs and the 30Y at its prev auction level.


Comment : Weakness will likely to prevail and selling interest to dominate as the rotation out of bonds continue. The 30Y SGS reopening auction will cast a shadow of doubt on the marketplace’s ability to stomach more long end papers at a paltry 2.83% yield (hist low in Jul 2.25%). My view is that we would need a miracle for any decent buying to return to the market.


Basis swaps : Seeing paying interest although flows were not dramatic. Weakness should be expected ahead with funds left unsterilised in the system as well as rumoured offshore deal issuances.



USD/SGD 1.2386 (+0.0026) approx 87 bp Above NEER (prev  76 ABOVE). 

6M SOR 0.48079-0.48721%

SGS Inflow Outflow (-5/+5) : -3


MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.25% (unch)
MAS 3M Bill SGD  2.6 bio (unch) cut off 0.28%  (+ 2 bp)
SGS 3M bill SGD 2 bio (UNCH)  cut off 0.28% (+ 5bp)
SGS 6M bill SGD 2 bio (unch)  cut off 0.29% (+ 3 bp)
SGS 2Y NEW BOND AUCTION. SGD 2.9 BIO CUT OFF 0.30% (exp 0.3/0.35).

4Q Unemployment 1.8% vs prev 1.9%.

 IRS : No top in sight yet as the market challenged the central bank in another stampede of a week. 6M SOR was all that remained calm trading UNCHANGED daily dismissing traders who, wisely,  paid every single tenor above 1Y in a sign of non conviction mainly led by the bond market exodus. New highs daily in the irs, the 10Y now up 20 bp YoY and the 5Y 8 bp from last Feb. Yields closed 5 to 14 bp higher on the week and 7 to 23 bp higher on the fortnight.

 Comment : Would appear overbought for the rates but so is every other asset class in the world and thus charts are unreliable under such extenuating circumstances. Like I said, Singapore plays the one day catch up, only this time it is as if 2012 did not happen and we cannot find the answer there. Going ahead, I would be cautious given the huge advantage certain market players have over the rest, I would rather express trading views in a major currency.

 SGS : Paradise lost in bonds as the bond story unravels onshore. SGS underperformed in a mad stampede for the narrow doorway and no buyers in sight except for fledging amounts from real money accounts that went largely snubbed and highly unrewarded. Worst performers the 2020-30Y papers as panic extended to investors while the new 2Y auction went smoothly with an auction cut off yield of 0.30%, much less than the yield change of the 30Y SGS since 1 Jan. Yields closed the week 1 to 18 bp higher and 2 to 26 bp higher on the fortnight.

 Comment : Meltdowns on the odd days and rallies on the even days, bond traders could not pay enough irs to save themselves particularly in the long end >10Y tenors on a sore lack of liquidity. The situation remains very tensed given that local banks were the main sellers which does not offer any comfort to the street. Thus, any correction would be shallow.

 Basis Swaps

Shifted right. Not much trading. Local bank dominated prices.

 Corporate Bonds



USD/SGD 1.2360 (+0.0085) approx 76 bp Above NEER (prev  111 ABOVE).
6M SOR 0.47824-0.5048%
SGS Inflow Outflow (-5/+5) : -2

MAS 28 Day Bill SGD 1.2 bio (unch) cut off 0.25% (+3 bp)
MAS 3M Bill SGD  2.6 bio (unch) cut off 0.26%  (unch)
SGS 3M bill SGD 2 bio (UNCH)  cut off 0.23% (unch)

Economic Data
Singapore Dec CPI +4.3% YoY vs exp +3.8%. +0.7% MoM vs exp +0.5%.
Singapore Dec IP -0.6% YoY vs exp -4.8% +5.4% MoM vs exp -0.7%

IRS : Reluctant move up in rates on a lethargic marketplace, still dominated by deal pricings. Rates were hestitantly higher early in the week, the market quite unsure what to make of the firmly capped fixings rumoured to be on the back of  liquidity injections into the system. Coupled with an offshore
issuance in the 3Y and a stat board issue in the 5Y,  steepeners paid up gradually to a high on Friday and opened Monday morning another leg higher for a week on week change of 2 to 10 bp, outperforming the bonds.

Comment : Market displaying a definite lack of depth and liquidity for the strongest to rule. Rates are likely to rise more mutedly and complacently for the time being with the massive catch up in a one day affair, like all the times last year. Market positioning is on the paid side with receivers seen in basis traders who sell SGD rates vs the USD which makes sense in view of the higher CPI and Ind Production numbers, thus lower the probability of SGD weakening ahead and implying low rates to stay.

SGS : Slam dunk with waves of selling seen daily on the same old bonds, I suspect. The 30Y led the crash and never looked back falling some 5 cents this year already. Market players capitalised on the lack of investor demand, on the back of the slew of corp issuances, to dump bonds on the street intraday each morning and wait to collect back lower in the afternoon. Buying interest emerged in the 15Y and the Jun 2019 sometime towards the week end to support 5-10Y prices for yields to close the week 1 to 16 bp higher, on a steeper curve.

Comment : Prolonging the pain with swaps is not a good strategy under current conditions. The 30Y SGS has underperformed the US Long Bond which has only rose some 10 bp in yield. The 10-30Y SGS spread is now the widest in history at 131 bp and looks likely to widen in the absence of intervention given the lack of
mortgage convexity players in the local market. I will tread with caution and look to explore putting on the spread potentially soon at levels close to the UST 10-30Y wides of 150 bp in 2010.

Corporate Bonds
TATA COMMUNICATIONS (Unrated) 3Y SGD SENIOR 250MIO 4.25% (initial coupon 4.875%) ~ swapped to USD.
HDB 5Y 30-Jan-18 SGD SENIOR 1BIO  1.230% SOR +30 bp ~ swap neutral


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)

 Economic Data

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.

Basis Swaps

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.

 Corporate Bonds

HONG FOK PROPERTIES 5Y SGD 100M SENIOR  4.75% SOR +385 BP ~ swap neutral

16-Jan 1.
UNICREDITO SPA LT210.5Y SGD 300M LT2  Baa3 BBB BBB+ 5.500% SOR+462 BP ~swapped into USD or EUR 3.



USD/SGD 1.2261(-0.0043) approx 113 bp Above NEER (prev  149 ABOVE).
6M SOR 0.5109-0.52044%
SGS Inflow Outflow (-5/+5) : +1

MAS 28 Day Bill SGD 1.2 bio (+200) cut off 0.23% (+4 bp)
MAS 3M Bill SGD  2.6 bio (+200 mio) cut off 0.27%  (+2 bp)
SGS 3M bill SGD 2 bio (UNCH)  cut off 0.19% (-6 bp)

IRS: Market took relief from an offshore corporate deal to recover some ground in the rates which dipped lower. Saw better offers in the irs, basis and fwds on the back of deal pricing and speculative selling with only local bank seen supporting in the steepeners and long end rates.  Rates closed the week 3 to 4 bp lower.

Comment : Significant news out over weekend on new property measures are likely to keep players sidelined as they evaluate the impact on the loan market and interest rates. The weakening of the SGD NEER would substantiate as a reflex reaction that may follow through into the Budget next month. Thus, steepeners remain a sensible trade as the short end will be “well managed” for volatility as central bank in the world is doing. Directional play would tend to lower rates as corporate issuances continue to see inordinate demand.

SGS : SGS market continues to slight the 30Y SGS as if to demonstrate a real lack of depth after a market sale of SGD 50 mio 2 weeks ago which has failed to be digested. Rest of the curve rallied hard, particularly the 10Y SGS which saw real money interest mid week and the short end Jul 2014. Rest of the belly papers also rallied along with the entire curve outperforming the 30Y bond for the curve to close 1 to 6 bp lower, the 10Y SGS outperforming.

Comment : Still too early to anticipate slower loan growth especially with the ample liquidity in the system everyday which makes bonds a buy. Safe haven in flows will also support the short end papers but the long end >10Y will have little support and a buyer pool quite lacking in diversity. Would expect the 30Y bond to remain weak into the reopening auction end Feb.

Basis Swaps : A big shift left early in the week on the ICICI issue quickly dissipated when payers came out in force led by local bank. The price action in the short end, however, matched the move left in the fwds for the curve to close -1 to unchanged.

Corporate Bonds
1. ICICI (Baa3/BBB-) SGD 225 mio(oda book >3 bio) 7Y 3.65% SOR +230 bp. ~ basis
swap to USD.
2. HOTEL PROPERTIES LTD (UNRATED) SGD 45 MIO 5Y 3.5% SOR+260 bp. ~ basis neutral
3. FCT MTN PTE LTD (UNRATED) SGD 70 MIO 7Y 3% SOR+173 bp. ~ basis neutral

Biosensors 4Y 5.25% SGD 200 mio ~ basis swap to USD