Key points
- The yields on the 30 -year -old government debt of the United Kingdom, German and Japan, 30 are approximately 45 basic points, 74 basic points and 100 basic points this year.
- This is in a marked contrast with Singapore, whose 30 -year -old bond yields have decreased by approximately 75 basic points so far this year, indicating a strong interest of investors.
- Analysts tell CNBC that Singapore bonds are seen as high quality safe shelter assets, backed by a prudent fiscal policy.
Investors have thrown long -term bonds in markets this year about the growing concerns about the expansion of fiscal deficits and the increase in inflation. Singapore has challenged that trend. The yields on the 30 -year government debt in the United Kingdom, German and Japan of 30 years are approximately 45 basic points, 74 basic points and 100 basic points this year, respectively, and several reach new milestones this week. Japan’s 30 -year bond performance reached a record record on Wednesday, thanks to high inflation, monetary adjustment expectations and political uncertainty. The 30 -year yields of the United Kingdom reached its maximum in almost three decades on Tuesday in the midst of tax concerns. Bond market market performance to date “has been lousy” for the developed market, “particularly the golden and JGB gold due to their adverse local dynamics,” said Winson Phoon, head of fixed income of Maybank Securities to CNBC. This is in a marked contrast with Singapore, whose 30 -year -old bond yields have decreased by approximately 75 basic points so far this year, indicating a strong interest of investors. Bond yields and prices move in the opposite direction: the interest of investors raises prices, depressing yields and vice versa. It is considered that Singapore government bonds are high quality assets and Haven, and that is promoting their demand, said Yujun Lin, CEO of Brokerage Interactive Brokers Singapore. “Investors concerned with a refreshing global economy can find Singapore’s AAA credit qualification and a consistently conservative attractive fiscal policy,” he added. Singapore is just one of the nine countries in the world that has an AAA Credit qualification of S&P, Fitch and Moody’s. In comparison, the United States has an AA+ S&P and Fitch rating, a notch, while Japan has a S&P A+ credit rating, four lower notches than Singapore. The fiscal prudence of the fiscal prudence of Singapore is a “strong contrast” with the pressures observed in many developed economies, said such a Hiang Tat, head of credit negotiation at CGS International Securities Singapore. According to its constitution, Singapore must administer a balanced budget through the period of a government, and the country currently does not have net debt. “Our solid balance explains why Singapore receives the main credit rating of AAA of the three main international credit rating agencies,” said the Singapore government. Given its balanced budget, the city-state does not issue bonds to finance a deficit, but for objectives that include collecting money to meet temporary cash flows, build its debt market and help at prices of private debt titles. Singapore has also managed inflation more effectively than many important economies, said so. The latest inflation figures in the country reached 0.6% for July, the lowest since January 2021. High inflation forces central banks to increase interest rates, which increases the yields of the bonds. Singapore’s unique monetary policy, which controls the Singapore dollar exchange rate configuration instead of using a reference interest rate, has been effective in inflation management. This framework allows the Singapore dollar to be seen in response to inflationary pressures, he said so, and this helps control imported inflation more effectively, which further supports the demand for bonds as real yields remain attractive. Analysts expect the demand for Singapore government bonds to remain healthy, given its stable economic foundations and their political environment. Maybank’s Phoon said that offers for Singapore bonds have become more aggressive in prices amid wide liquidity conditions. Given strong entries and no sign of the most eliminates excess liquidity, SGD yields have been falling sharply and could be kept low for longer, he added. The CGS’s so also said that the strong macroeconomic backdrop of Singapore has attracted substantial capital tickets, as evidenced by the SGD appreciation. These tickets have resulted in a significant liquidity that enters local financial markets, including the bond market. The Singapore currency has strengthened around 5.46% against the dollar this year. SGD = 1m Mountain
