Singapore: Position for a widening US-SG spread - ANZ

Analysts at ANZ are expecting the Monetary Authority of Singapore (MAS) to be on hold at the April policy review, continuing its modest and gradual S$NEER appreciation stance.

Key Quotes

“We think it is only a pause, with possibly further tightening down the track. We do not expect the MAS to ease.”

“We think Singapore exports may be bottoming. Historically, US-SG rate spreads tend to widen if Singapore's growth is picking up while US growth holds well. After narrowing since late 2018, we expect US-SG rate spreads to re-widen.”

“We recommend paying 5Y US IRS 5Y forward (5Yx5Y), at 2.66%, and receiving 5Y SG IRS 5Y forward (5Yx5Y), at 2.49%. We expect the spread to widen from 17bps currently to 45bps, with stop loss at 0bps.”