OOK L T

DAILY TREASURY OUTLOOK
Treasury Research
Selena Ling
+65 6530-4887
LingSSSelena@ocbc.com
Emmanuel Ng
+65 6530-4073
NgCYEmmanuel@ocbc.com
Wellian Wiranto
+65 6530-5949
WellianWiranto@ocbc.com
Tommy Xie Dongming
+65 6530-7256
XieD@ocbc.com
Barnabas Gan
+65 6530-1778
BarnabasGan@ocbc.com
OCBC Credit Research
Lee Chok Wai
+65 6722-2215
ChokWaiLee@ocbc.com
OCBC Wing Hang
Iris Pang
+852 2852-5289
IrisPang@ocbcwh.com
Timothy Sham
+852 2852-5791
TimothyPYSham@ocbcwh.com
Treasury Advisory
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Tel: 6349-1810
Tuesday, October 28, 2014
Highlights
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
Global risk appetite remained cautious amid disappointing global
economic cues, even as the ECB announced it had purchased
EUR1.704b of covered-bonds last week. Meanwhile, the IEA warned
that the refining industry will face structural weakness in the long run if
fuel demand stays weak, and for several years a global refinery capacity
surplus is emerging. Expect Asian markets to trade slightly defensively
today amid less than stellar economic clues.
Key economic data releases: US’ Sep pending home sales rebounded
3.0% yoy nsa (+0.3% mom), albeit still below market expectations, after
contracting by 4.1% yoy (-1.0% mom) in Aug. However, the Oct Dallas
Fed manufacturing activity index unexpectedly softened from 10.8 in Sept
to 10.5 in Oct (forecast: 11.0), and both the Markit services and
composite PMIs also retreated to 57.3 and 57.4 in Oct, down from 58.9
and 59.0 respectively in Sep. Across in Germany, the Oct IFO business
th
climate also slipped for the 6 straight month from 104.7 to 103.2, with
both the current assessment and expectations gauges lower at 108.4
(previously 110.4) and 98.3 (previously 99.3) respectively. UK’s CBI
reported that sales were unchanged at 31 in Oct, whereas Taiwan’s Sep
leading index rose from 0.10% to 0.11%. Japan’s Sep retail trade also
unexpectedly improved by 2.3% yoy (+2.7% mom).
Economic data due today: US’ Sep durable goods orders, S&P/CS
home prices, Oct consumer confidence and Richmond Fed manufacturing
index; German import price; Italy’s business confidence and economic
sentiments for Oct; Japan’s small business confidence; and Thailand’s
Sep trade data.
Wall Street ended largely unchanged, with energy stocks under
pressure as crude oil prices dipped below US$80 per barrel whereas
telcos and consumer shares gained: Dow +0.07%, S&P500 -0.15%
and Nasdaq +0.05%. Decliners included Halliburton Co, Nabors
Industries, and Merck & Co. VIX -0.43% to 16.04.
The US Treasury bonds ended a tad firmer amid disappointing data:
The 2- and 10-year bond yields were at 0.39% and 2.26% respectively.
There is a US$29b 2-year note auction today, followed by US$35b of 5year debt and US$15b of 2-year floating rate notes on Wed, and US$29b
of 7-year notes on 30 Oct.
Singapore: China will start direct trading of CNY and SGD in the
interbank forex market today.
China: The direct SGD and RMB trading will officially kick off today in
China’s interbank market. The direct transaction is expected to reduce the
CNY/SGD trading spread, thereby reducing transaction costs for
customers. The move will help Singapore strengthen its position as a
leading offshore RMB hub.
Hong Kong: Mortgage loans for refinancing increased by 5.9% mom to
HKD4.1 billion in Sep, which indicates that the market expects a rising
asset price trend. Meanwhile, exports slowed slightly to 4.5% yoy in Sep
28 October 2014
Daily Treasury Outlook


from 6.4% yoy in Aug. The slowdown in exports growth was mainly due to
weak performance in the major advanced economies. Nevertheless,
exports to most Asian countries and electric machinery exports continued
to support Hong Kong’s trade. An increase in Hong Kong’s import
suggests a pickup in Hong Kong’s exports in the coming months.
Korea: Consumer confidence index fell from 107 in September to 105 in
October, the lowest print since July this year, according to the Bank of
Korea.
Indonesia: Bank Indonesia is planning to issue a new regulation on
foreign debt exposure that domestic corporations have built up. The
central bank has repeatedly expressed concerns before, regarding the
pace of increase in foreign debt exposure, which it views as a risk point
given potential impact from currency depreciation on debt servicing costs.
Separately, BI’s deputy governor told the press that Indonesia’s economy
likely grew by 5.2% yoy in Q3. Current account deficit is said to be 3% of
GDP over the same period, a more acceptable print after Q2’s 4.4%
deficit.
Major Markets

Singapore: The STI +0.11% to end at 3226.11 yesterday, but may trade
sideways today amid flat leads from Wall Street overnight and morning
slippage in Nikkei and Kospi. STI may trade in a 3200-3230 today. The
SGS bonds follow US Treasury bond’s lead and trade modestly firmer
again today.

Malaysia: The KLCI inched up by 0.24% to close at 1823.15 yesterday. A
listless trading day ahead looks likely on lack of major global and
domestic cues.
Bond Market Update
Treasury Research & Strategy

Market Commentary: Yesterday, the SGD swap rates traded 2bp-3bp
higher across the curve. In the SGD corporate bonds space, flows were
very quiet but tones have turned more balanced with buyers on the
sidelines waiting to buy on dip especially on the shorter-dated papers. In
the primary market, Oxley Holdings Ltd priced a S$75mn 2-year issue at
5.15%. Loyz Energy Ltd is planning a new SGD 2.5-year issue with initial
price guidance at 9%.

New Issues: China Travel Service Holdings Hong Kong Ltd priced a
dual-tranche issue, with the US$300mn 5-year tranche at CT5+240bp and
the US$700mn 10-year tranche at CT10+345bp. China Hongqiao Group
Ltd priced a US$300mn 3.5-year issue at 6.875%. Tewoo HK Ltd priced a
US$400mn 3-year issue at CT3+210bp. Bank of China Ltd is planning a
new Basel 3 Tier 2 issue with investor meetings commencing on 31st
October.

Rating Changes: Moody’s upgraded the foreign currency issuer rating of
Korea District Heating Corp to “A1” from “A2”, with a stable outlook.
2
28 October 2014
Daily Treasury Outlook
Moody’s upgraded the foreign currency issuer rating of Korea Gas Corp
to “Aa3” from “A1”, with a stable outlook. Moody’s upgraded the issuer
rating of Korea Land & Housing Corp to “Aa3” from “A1”, with a stable
outlook. Moody’s upgraded the foreign currency issuer rating of Korea
National Oil Corp to “Aa3” from “A1”, with a stable outlook. Moody’s
upgraded the issuer rating of Korea Railroad Corp to “Aa3” from “A1”, with
a stable outlook. Moody’s upgraded the issuer rating of Korea Resources
Corp to “Aa3” from “A1”, with a stable outlook. S&P downgraded the longterm corporate credit rating of PT Metropolis Propertindo Utama to “B-”
from “B”, with a negative outlook.
Treasury Research & Strategy
3
28 October 2014
Daily Treasury Outlook
Key Financial Indicators
Foreign Exchange
Day Close % Change
DXY
85.495
-0.28%
USD-JPY
107.820
-0.31%
EUR-USD
1.2698
0.21%
AUD-USD
0.8802
0.10%
GBP-USD
1.6120
0.19%
USD-MYR
3.2765
-0.05%
USD-CNY
6.1162
0.00%
USD-IDR
12109
0.33%
USD-VND
21285
0.05%
USD-SGD
EUR-SGD
JPY-SGD
GBP-SGD
AUD-SGD
NZD-SGD
CHF-SGD
SGD-MYR
SGD-CNY
Day Close % Change
1.2745
-0.06%
1.6185
0.15%
1.1821
0.26%
2.0546
0.12%
1.1219
0.02%
1.0062
0.47%
1.3423
0.19%
2.5684
0.00%
4.7990
0.06%
Equity and Commodity
Index
Value Net change
DJIA
16,817.94
12.50
S&P
1,961.63
-2.90
Nasdaq
4,485.93
2.20
Nikkei 225 15,388.72
97.10
STI
3,226.11
3.60
KLCI
1,823.15
4.30
JCI
5,024.29
-48.80
Baltic Dry
1,285.00
93.00
VIX
16.04
-0.10
Interbank Offer Rates (%)
Tenor
EURIBOR
1M
0.0120
2M
0.0490
3M
0.0850
6M
0.1880
9M
0.2600
12M
0.3410
Change
-------
Tenor
O/N
1M
2M
3M
6M
12M
USD Libor
0.0905
0.1520
0.1985
0.2331
0.3229
0.5426
Government Bond Yields (%)
Tenor
SGS (chg)
UST (chg)
2Y
0.42 (+0.01)
0.38 (--)
5Y
1.44 (+0.04) 1.49 (-0.01)
10Y
2.27 (+0.03) 2.26 (-0.01)
15Y
2.68 (+0.03)
-20Y
2.82 (+0.03)
-30Y
2.92 (+0.03) 3.04 (-0.01)
Singapore Rates (%)
Tenor
SOR Fixing
1D
0.0551
1M
0.1624
3M
0.2446
6M
0.3227
Change
-0.0096
0.0000
0.0014
0.0000
Tenor
1M
3M
6M
12M
Change
-------
Financial Spread (bps)
Value
LIBOR-OIS
14.56
EURIBOR-OIS
7.20
TED
22.75
SGD SIBOR Change
0.3654
0.0037
0.4130
-0.4975
-0.6267
--
Change
0.20
0.05
-0.05
Eurozone & Russia Update
2Y Bond Ylds (bpschg) 10Y Bond Ylds (bpschg)
Portugal
Italy
Ireland
Greece*
Spain
Russia*
0.93
0.67
0.05
6.25
0.50
4.13
12.80
1.40
-0.50
46.10
-0.50
3.10
3.40
2.55
1.80
7.51
2.14
5.08
13.70
3.60
-0.70
18.50
-3.20
0.00
10Y Bund
Spread %
2.53
1.68
0.93
6.64
1.27
4.21
CDS
191.25
126.59
59.65
452.30
95.29
253.99
CDS
Change
1.54
-6.63
-4.94
--0.84
2.81
Equity
Index
2319.46
19028.67
4668.81
958.69
10195.20
1394.27
% Change
-0.76
-2.40
0.05
-3.29
-1.39
13.88
* Shows 3-year bond yields rather than 2-year
Com m odities Futures
Energy
WTI (per barrel)
Brent (per barrel)
Heating Oil (per gallon)
Gasoline (per gallon)
Natural Gas (per MMBtu)
Futures
81.00
85.83
2.475
2.17
3.561
% chg
-0.01%
-0.35%
-0.27%
-0.53%
-1.71%
Soft Com m odities
Coffee (per lb)
Cotton (per lb)
Sugar (per lb)
Orange Juice (per lb)
Cocoa (per mt)
Futures
1.909
0.6367
0.1603
1.3725
2,970
% chg
-0.31%
-0.22%
-2.14%
-2.00%
-2.62%
Base Metals
Copper (per mt)
Nickel (per mt)
Aluminium (per mt)
Futures
6,730.0
14,739
1,987.0
% chg
0.60%
-1.50%
0.79%
Grains
Wheat (per bushel)
Soybean (per bushel)
Corn (per bushel)
Futures
5.2275
10.060
3.6300
% chg
0.97%
2.92%
2.83%
Precious Metals
Gold (per oz)
Silver (per oz)
Futures
1,229.1
17.184
% chg
-0.17%
-0.12%
Asian Com m odities
Crude Palm Oil (MYR/MT)
Rubber (JPY/KG)
Futures
2,188.0
187.6
% chg
-0.50%
1.52%
Source: Bloomberg, Reuters
(Note that rates are for reference only)
Treasury Research & Strategy
4
28 October 2014
Daily Treasury Outlook
Key Economic Indicators
Date
10/27/2014 10:00
10/27/2014 15:40
10/27/2014 15:40
10/27/2014 15:40
10/27/2014 16:06
10/27/2014 16:30
10/27/2014 16:30
10/27/2014 16:30
10/27/2014 17:00
10/27/2014 17:00
10/27/2014 17:00
10/27/2014 17:00
10/27/2014 17:00
10/27/2014 21:45
10/27/2014 21:45
10/27/2014 22:00
10/27/2014 22:30
10/28/2014 07:50
10/28/2014 07:50
10/28/2014 13:00
10/28/2014 15:00
10/28/2014 15:00
10/28/2014 16:00
10/28/2014 16:00
10/28/2014 16:00
10/28/2014 17:00
10/28/2014 20:30
10/28/2014 20:30
10/28/2014 20:30
10/28/2014 20:30
10/28/2014 21:00
10/28/2014 21:00
10/28/2014 22:00
10/28/2014 22:00
SK
VN
VN
VN
TA
HK
HK
HK
GE
GE
GE
EC
EC
US
US
US
US
Event
Department Store Sales YoY
Exports YTD YoY
Imports YTD YoY
Retail Sales YTD YoY
Leading Index MoM
Exports YoY
Imports YoY
Trade Balance
IFO Business Climate
IFO Current Assessment
IFO Expectations
M3 Money Supply YoY
M3 3-month average
Markit US Services PMI
Markit US Composite PMI
Pending Home Sales MoM
Dallas Fed Manf. Activity
Sep
Oct
Oct
Oct
Sep
Sep
Sep
Sep
Oct
Oct
Oct
Sep
Sep
Oct P
Oct P
Sep
Oct
Survey
-13.60%
11.10%
--6.00%
4.60%
-38.9B
104.5
110
99.2
2.20%
2.00%
57.8
-1.00%
11
Actual
-6.30%
13.40%
11.20%
11.10%
0.11%
4.50%
6.30%
-50.4B
103.2
108.4
98.3
2.50%
2.10%
57.3
57.4
0.30%
10.5
Prior
10.50%
14.10%
11.10%
11.10%
0.05%
6.40%
3.40%
-31.5B
104.7
110.5
99.3
2.00%
1.80%
58.9
59
-1.00%
10.8
Revised
----0.10%
----110.4
-2.10%
------
JN
JN
JN
GE
GE
TH
TH
TH
IT
US
US
US
US
US
US
US
US
Retail Trade YoY
Retail Sales MoM
Small Business Confidence
Import Price Index MoM
Import Price Index YoY
Customs Exports YoY
Customs Imports YoY
Customs Trade Balance
Business Confidence
Durable Goods Orders
Durables Ex Transportation
Cap Goods Ship Nondef Ex Air
Cap Goods Orders Nondef Ex Air
S&P/CS Composite-20 YoY
S&P/CaseShiller 20-City Index NSA
Consumer Confidence Index
Richmond Fed Manufact. Index
Sep
Sep
Oct
Sep
Sep
Sep
Sep
Sep
Oct
Sep
Sep
Sep
Sep
Aug
Aug
Oct
Oct
0.80%
0.90%
48.5
-0.10%
-1.90%
-0.20%
-6.90%
$1300M
95
0.50%
0.50%
0.70%
0.70%
5.70%
173.89
87
11
2.30%
2.70%
----------------
1.20%
1.90%
47.6
-0.10%
-1.90%
-7.40%
-14.17%
$1150M
95.1
-18.20%
0.70%
0.10%
0.60%
6.75%
173.34
86
14
----------18.40%
0.40%
-0.40%
-----
Source: Bloomberg
Treasury Research & Strategy
5
28 October 2014
Daily Treasury Outlook
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Treasury Research & Strategy
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