HALISTER1: MAS Likely to Tweak Guidance to Pave Way for 1H Tightening: HSBC

MAS Likely to Tweak Guidance to Pave Way for 1H Tightening: HSBC

(Bloomberg) -- MAS will likely tweak forward guidance either by changing the wording or removing "extended period" altogether, HSBC analysts including Joseph Incalcaterra write in report Friday.
  • The “worst has passed for Singapore,” but MAS is in no rush, the analysts write, adding that they forecast a return to a gradually positive slope in 1H 2018
    • Cyclical data have improved, labor market troughed and signs of an incipient recovery in the property market are starting to be seen
    • HSBC expects no change to SGD NEER policy
    • Modifications to, or even removal of, forward guidance should lead to a modest gain in SGD NEER, potentially to a new YTD high, i.e. beyond 1.3% above midpoint of estimated policy band, provided USD strength abates
    • SGD will outperform other low-yielding Asian FX, notably the THB and TWD, the analysts write
  • Interest rates in Singapore are likely to fall if the MAS surprises hawkishly
    • HSBC favours staying received SGD- USD5yr IRS spread ahead of the MAS meeting
  • NOTE: Credit Suisse also expects Singapore’s central bank to remove its forward guidance of an extended period of neutral policy stance
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Shikhar Balwani

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Joseph Incalcaterra (Hongkong & Shanghai Banking Corp Ltd/The)

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