HALISTER1: SINGAPORE RESEARCH ROUNDUP: MAS’s Move Signals Growth Concerns

SINGAPORE RESEARCH ROUNDUP: MAS’s Move Signals Growth Concerns

(Bloomberg) -- Monetary Authority Singapore’s unexpected easing in its monetary stance, suggests concerns over growth and inflation, analysts say in interviews and research notes.
  • MAS shifted to a neutral stance of zero appreciation in Singapore dollar: statement; says width of policy band and the level at which it is centered will be unchanged
  • Singapore dollar slides 0.8% to 1.3615 per U.S. dollar, set for largest drop since Jan. 4; 2-year interest-rate swap jumps 9 bps to 1.6100%, poised for biggest increase since Feb. 12; 2-year govt bond yield rises 7 bps to 1.00%
  • Westpac (Sean Callow, senior currency strategist)
    • This surprise move indicates a gloomy outlook for regional trade; MAS is now more downbeat on outlook for both growth and inflation
    • As one of the world’s most trade-sensitive economies, Singapore’s concern over a “less favourable external environment” should be noted by the likes of RBA and RBNZ
  • ANZ (Weiwen Ng, economist)
    • Singapore is leveraging on twin policy levers -- fiscal and exchange rate -- to address potential downside risks to growth and inflation as well as a deteriorating labor market
    • MAS’s easing in stance to neutral leaves door open for re-centering of policy band later in the year if conditions warrant
    • There’s also room for off-budget measures at a later stage to address any potential economic shocks
  • Nomura (Craig Chan and other strategists, economists)
    • Given MAS’s move to zero appreciation stance, Nomura expects flattening pressure to continue in yield curve
    • Continues to believe higher term-funding rates are new norm in Singapore
    • Expects rates to come under upward pressure as market prices out FX carry gains; this should also cause SGD rates to underperform USD rates
  • Bank of Singapore (Sim Moh Siong, FX strategist)
    • Today’s move represents easing but MAS is careful to maintain that this isn’t a policy to depreciate local currency
    • Right now, zero slope means MAS wants Singapore dollar to be stable vs basket of currencies; however, market will take this as a signal of easing and there’s room for Singapore dollar to fall to weak side of band
  • ABN Amro (Roy Teo, senior FX strategist)
    • MAS’s decision is in line with ABN Amro’s view that strong gains in S$NEER will pose headwinds to exports and inflation outlook
    • Forecasts USD/SGD at 1.4000 for year-end
  • DBS (Philip Wee, senior currency economist)
    • There’s been a deterioration of economic conditions since MAS’s last meeting; if things have already worsened, why wait for October to ease?
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Weiwen Ng (Australia & New Zealand Banking Group Ltd)
Craig Chan (Nomura Holdings Inc)
Moh Sim (ING Groep NV)
Philip Wee (DBS Group Holdings Ltd)
Roy Teo (ABN AMRO Group NV)

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HALISTER1: MAS Easing Consistent With Taylor Rule, Stay Short SGD: Redward

MAS Easing Consistent With Taylor Rule, Stay Short SGD: Redward

(Bloomberg) -- While MAS easing today may have been surprising, it is consistent with a Taylor Rule model, Peter Redward, principal at Redward Associates, says in an interview.
  • Continue to short SGD NEER via a 5-country proxy basket and also by receiving 1-year interest rate swaps, Redward says
  • Notable points from MAS statement today include:
    • Growth will likely be at a modest 1.0%-3.0% in 2016, and the level of activity will be slightly below potential
    • External demand will be softer, with concerns about the housing sector
    • Core inflation forecasts have been adjusted down to the lower half of 0.5%-1.5% forecast range
  • USD/SGD up 0.9% to 1.3623
  • SGD 1-year swaps up 12 bps, most since August to 1.4650%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Peter Redward (Redward Associates Ltd)

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HALISTER1: INDONESIA TRADE PREVIEW: USD/IDR 1-Mo. NDFs Eye Test of 50-DMA

INDONESIA TRADE PREVIEW: USD/IDR 1-Mo. NDFs Eye Test of 50-DMA

(Bloomberg) -- USD/IDR 1-mo NDFs may breach 50-DMA resistance even if Indonesia’s March trade data matches expectations as the data may highlight ongoing weakness in global trade, spurring risk-off sentiment, Bloomberg strategist David Finnerty writes.
  • Indonesian March trade data due tomorrow
    • Trade balance is expected to fall to $465m from $1.1b in Feb. as exports are forecast at -14.32% y/y vs -7.18% y/y in Feb.; imports estimated at -12.02% y/y vs -11.71% in Feb.
  • Ongoing weakness in global trade can further be illustrated by Singapore’s MAS surprise decision today to ease its monetary policy to help support its trade sensitive economy
  • Breach and close above 50-DMA may see IDR NDFs test resistance at 13,507, March 29 high, in short-term
  • Slow stochastics bullish with %D reading of 34 and rising
  • NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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HALISTER1: INSIDE INDONESIA: IDR Falls; CDS Premium Narrows to 4-Week Low

INSIDE INDONESIA: IDR Falls; CDS Premium Narrows to 4-Week Low

(Bloomberg) -- Rupiah drops 0.6% to 13,235 per dollar; five-year credit-protection costs for Indonesia fell 5 bps yesterday to 196 bps, lowest daily close since March 18, according to CMA.
  • Indonesia’s electricity use rose 8.15% y/y in March, the highest in at least 4 yrs, Investor Daily Indonesia reports
  • USD/IDR climbs after yesterday’s bullish outside-range day
    • 1st resistance: 13,237, April 6 high; 2nd resistance: 13,245, March 31 low; 3rd resistance: 13,306, 50-DMA
    • 1st support: 13,091, April 13 low; 2nd support: 13,033, March 18 low; 3rd support: 13,010, March 14 low
  • International investors were net sellers of 503b rupiah ($38m) in Indonesian bonds on April 11, according to finance ministry data; net sellers of $7.5m in local equities yesterday, according to exchange data
  • 10-year govt bond yields little changed at 7.428%
  • Palm oil shipments seen falling 8.3% in March, according to survey; Indonesian Palm Oil Association to publish data later this month
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283