HALISTER1: SGD Bonds Drop as Korea’s Outflow Spurs Bets on Shift From Asia

SGD Bonds Drop as Korea’s Outflow Spurs Bets on Shift From Asia

(Bloomberg) -- Singapore’s sovereign yield curve bear-steepens as the biggest outflow from South Korea’s govt bonds since at least 2014 spurs concern global funds will shift focus away from Asia.
  • Selloff of Singapore’s bonds accelerates as Treasuries extend declines into London session after U.S. 10-year yield broke 200- DMA
  • Foreign investors sold more than 2t won ($1.7b) of Korean Treasuries on Tuesday, according to data from finance ministry
  • Caution may be creeping in as markets head into 4Q, says UOB rates strategist Victor Yong
    • Report of large liquidation in Korean treasury bonds fans concern over portfolio rebalancing from Asia but not a “disruptive” exit
    • Related to that is improvement in sentiment toward U.S., driven by a possible Fed rate hike, balance-sheet compression and tax reforms
    • Sees Singapore’s 10-year yield rising to 2.35% by year-end
    • UOB expects Monetary Authority of Singapore to tighten currency policy in April 2018, which should provide a buffer from any U.S. rate increases
  • Yield changes on the day:
    • 5s: +5bps to 1.72%
    • 10s: +5bps to 2.23%
    • 20s: +9bps to 2.54%
    • 30s: +8bps to 2.58%
    • NOTE: Yield changes are computed by comparing current prices with Wednesday’s closes released by MAS
To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Victor Yong (United Overseas Bank Ltd)

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