1. business and industrial

DAILY TREASURY OUTLOOK
Friday, November 14, 2014
Highlights


Treasury Research
Selena Ling
+65 6530-4887
[email protected]
Emmanuel Ng
+65 6530-4073
[email protected]
Wellian Wiranto
+65 6530-5949
[email protected]
Tommy Xie Dongming
+65 6530-7256
[email protected]
Barnabas Gan
+65 6530-1778
[email protected]


OCBC Credit Research
Lee Chok Wai
+65 6722-2215
[email protected]

OCBC Wing Hang
Iris Pang
+852 2852-5289
[email protected]
Timothy Sham
+852 2852-5791
[email protected]

Treasury Advisory
Corporate FX & Structured
Products
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Tel: 6349-1810


Global sentiment remains largely directionless, on lack of major
economic data release. US initial jobless claims for the week did inch up
to 290k compared to 280k, but market appears to have taken it in strides
given the recent strong run to a 14-year low. Meanwhile, China’s
economic data remained on the soft side, with indicators such as retail
sales and industrial production coming either below or just meeting
market expectations, prompting market chatters about possible PBOC
liquidity injections in the absence of large scale government stimulus.
Elsewhere, crude oil slump deepened, given recent OPEC member
comments on the absence of production cuts. In particular, Brent dropped
by 4.5% this morning, trading at around $77.5 per barrel.
Key economic data releases: US’ initial jobless claims added 12k to
290k (9th straight week under 300k) while continuing claims edged higher
to 2.392m. Over in Asia, Japan’s Sep machine orders unexpectedly
gained 2.9% mom (+7.3% yoy), the 4th straight month gain. Elsewhere,
China’s Oct industrial production softened to 7.7% yoy from 8.0% yoy in
Sep while retail sales slowed to 11.5% yoy (slowest since early 2006)
from 11.6% in Sep and Oct fixed investment grew by 15.9% YTD, the
weakest pace since Dec 2001.
Economic data releases for today: US’ Oct retail sales, Nov Univ. of
Michigan confidence; France/Germany/Italy/EZ/Hong Kong/Malaysia’s 3Q
GDP; EZ Oct CPI; and Singapore’s Sep retail sales.
Wall Street rose: Dow +0.23%, S&P500 +0.05% and Nasdaq +0.11%.
World’s largest retailer Wal-Mart climbed after reporting earnings that
beat estimates. VIX +5.91% to 13.79.
US Treasury bonds rose: The 2- and 10-year bond yields were at 0.52%
(-2bps) and 2.34% (-3bps) respectively. The US$16b 30-year bond
auction drew a bid-cover ratio of 2.29x (weakest since May), fetched a
yield of 3.092% and indirect bidding of 43.8%.
China: Oct economic data shows Chinese economy cooling further, with
industrial production, retail sales and fixed investments either just meeting
or missed expectations. In particular, breakdown of industrial production
data showed that businesses related to the property sector are doing
poorly, highlighting that the property sector remains a drag on the
economy. The Nov industrial production reading is expected to be even
weaker due to the APEC summit, which had many factories in northern
China shut to reduce air pollution.
Macau: Total RMB deposit in Macau dropped by 3.2% mom to
RMB118.7b in September. We believe the drop was due to an increasing
RMB remittance from Macau to Hong Kong due to the Shanghai-Hong
Kong Stock Connect. Expected increase in RMB denominated investment
products in Hong Kong would drive more RMB deposit from Macau to
Hong Kong in the near future.
Korea: Bank of Korea kept rate unchanged at 2.0% and signaled that it
would not respond directly to the recent Korean Won appreciation vis-à-
14 November 2014
Daily Treasury Outlook




vis Japanese Yen via policy rate cuts.
Indonesia: Bank Indonesia kept its policy rate unchanged at 7.5% in a
monetary policy meeting yesterday, as it awaits government’s actions on
fuel subsidy cuts before deciding whether to respond with rate hikes.
Meanwhile, Q3 current account deficit declined to 3.07% of GDP
compared to over 4% prior.
Malaysia: Q3 GDP is due out after market close today. We expect
headline growth to soften to 5.5% yoy in part due to base effect as well as
softer exports print. For the year as a whole, we still see growth holding
up at a respectable 5.7%.
Thailand: Thai rice buy-back program lost THB682.4bn (SGD26.9bn)
over the last ten years, according to Ministry of Finance. Still, the losses
may be amplified further since it does not account for the rice still in
stockpiles.
Commodities: The CRB index fell to 264.56 (-1.63%) yesterday, as
energy prices took a significant step down on reinforced expectation that
the OPEC cartel took indifference to the falling oil price. Gasoline fell the
most within the energy class to $2.00/gallon (-5.0%) to its lowest since
Sep 2010. Still, gold advanced marginally as US jobless claims printed
higher than expected.
Major Markets

Singapore: The STI rose to 3,304.93 (+0.65%) on the back of a surge in
Olam shares (+7.1%) as investors await the firm’s Q1 results this
morning. However, Golden Agri-Resources fell 7.84% as it posted its
worst quarterly profits in 11 years, weighed down by weak palm oil prices.
For today, we look for the index to range-trade between 3,300 – 3,310.

Malaysia: The KLCI barely moved yesterday, down by a mere 0.02% to
close at 1815.81. Ahead of GDP release after market close, we doubt that
the Bursa will be moving forcefully in either direction, especially in the
absence of major global cues.

Commodities: Once again, crude oil prices fell (quite significantly in fact)
as expectations that OPEC will resist production cut in its upcoming
OPEC meeting remains firmly fixated. Furthermore, recent OPEC data
showed that production remained strong at 30.253 mbpd in October,
printing above the 30mbpd quota set in place in Jan 2012. Note that
Saudi oil minister Ali-Naimi dismissed the notion of a price-war within
OPEC.
Bond Market Update

Treasury Research & Strategy
Market Commentary: Yesterday, the SGD swap rates traded about 1bp3bp higher across the curve. In the SGD corporate bonds space, flows
remained light with mixed interests in KRISSP 5.75% ’18, OLAMSP 6%
’22 and ARTSP 5% perp-c’19. Meanwhile, there were buyers of the
newly-issued GITISG 6% ’17. In the primary market, PT Profesional
Telekomunikasi Indonesia is planning a new SGD issue with investor
2
14 November 2014
Daily Treasury Outlook
th
meetings commencing on 17 November.

Treasury Research & Strategy
New Issues: Bank of East Asia priced a US$500mn 10nc5 issue at
CT5+270bp. Beijing Infrastructure Investment Co Ltd priced a dualtranche issue, with the US$700mn 3-year tranche at CT3+170bp and the
US$300mn 5-year tranche at CT5+167.5bp. QBE Insurance Group Ltd is
th
planning a new USD issue with investor meetings commencing on 17
November. ICICI Bank Ltd priced a RMB600mn 3-year issue at 4%.
3
14 November 2014
Daily Treasury Outlook
Key Financial Indicators
Foreign Exchange
Day Close % Change
DXY
87.674
-0.17%
USD-JPY
115.770
0.24%
EUR-USD
1.2477
0.31%
AUD-USD
0.8723
0.05%
GBP-USD
1.5711
-0.43%
USD-MYR
3.3390
0.10%
USD-CNY
6.1261
0.00%
USD-IDR
12205
0.08%
USD-VND
21325
0.14%
USD-SGD
EUR-SGD
JPY-SGD
GBP-SGD
AUD-SGD
NZD-SGD
CHF-SGD
SGD-MYR
SGD-CNY
Day Close % Change
1.2918
0.11%
1.6116
0.42%
1.1154
-0.16%
2.0296
-0.28%
1.1268
0.17%
1.0179
0.13%
1.3407
0.37%
2.5851
0.00%
4.7450
-0.06%
Equity and Commodity
Index
Value Net change
DJIA
17,652.79
40.60
S&P
2,039.33
1.10
Nasdaq
4,680.14
5.00
Nikkei 225 17,392.79
195.70
STI
3,304.93
21.20
KLCI
1,815.81
-0.40
JCI
5,048.67
-0.20
Baltic Dry
1,264.00
-63.00
VIX
13.79
0.80
Interbank Offer Rates (%)
Tenor
EURIBOR
1M
0.0090
2M
0.0440
3M
0.0790
6M
0.1810
9M
0.2560
12M
0.3360
Change
-------
Tenor
O/N
1M
2M
3M
6M
12M
USD Libor
0.0945
0.1528
0.2035
0.2332
0.3260
0.5638
Change
-------
Government Bond Yields (%)
Tenor
SGS (chg)
UST (chg)
2Y
0.51 (+0.01) 0.52 (-0.02)
5Y
1.51 (+0.01) 1.62 (-0.03)
10Y
2.33 (+0.01) 2.34 (-0.03)
15Y
2.69 (+0.01)
-20Y
2.84 (+0.01)
-30Y
2.96 (+0.01) 3.07 (-0.03)
Singapore Rates (%)
Tenor
SOR Fixing
1D
0.0167
1M
0.2510
3M
0.2660
6M
0.3518
Change
-0.0534
-0.0109
-0.0208
-0.0100
Tenor
1M
3M
6M
12M
SGD SIBOR
0.3778
0.4165
0.5056
0.6298
Change
-0.0083
--0.0002
-0.0046
Financial Spread (bps)
Value
LIBOR-OIS
13.42
EURIBOR-OIS
10.40
TED
22.70
Change
--0.39
Eurozone & Russia Update
2Y Bond Ylds (bpschg) 10Y Bond Ylds (bpschg)
Portugal
Italy
Ireland
Greece*
Spain
Russia*
0.72
0.63
0.07
7.15
0.45
4.22
-2.40
1.80
-1.80
18.20
1.90
4.60
3.21
2.38
1.60
8.15
2.14
5.08
-1.20
1.70
-0.50
12.10
3.00
0.00
10Y Bund
Spread %
2.41
1.58
0.80
7.35
1.34
4.28
CDS
208.68
129.80
57.67
452.30
105.65
281.51
CDS
Change
1.75
7.23
0.52
-11.06
3.84
Equity
Index
2271.45
18782.55
4777.98
883.54
10140.40
1492.27
% Change
0.94
0.43
-0.16
1.29
-0.17
-21.56
* 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
74.21
77.92
2.362
2.00
3.977
% chg
-3.85%
-3.06%
-3.47%
-5.00%
-4.97%
Soft Com m odities
Coffee (per lb)
Cotton (per lb)
Sugar (per lb)
Orange Juice (per lb)
Cocoa (per mt)
Futures
1.888
0.5973
0.1601
1.2860
2,798
% chg
2.36%
-3.57%
-2.14%
1.38%
-1.86%
Base Metals
Copper (per mt)
Nickel (per mt)
Aluminium (per mt)
Futures
6,657.0
15,343
2,048.0
% chg
-0.34%
-1.33%
-1.19%
Grains
Wheat (per bushel)
Soybean (per bushel)
Corn (per bushel)
Futures
5.5375
10.505
3.8625
% chg
2.03%
0.21%
2.25%
Precious Metals
Gold (per oz)
Silver (per oz)
Futures
1,161.5
15.621
% chg
0.21%
-0.01%
Asian Com m odities
Crude Palm Oil (MYR/MT)
Rubber (JPY/KG)
Futures
2,191.0
193.1
% chg
-1.04%
0.21%
Source: Bloomberg, Reuters
(Note that rates are for reference only)
Treasury Research & Strategy
4
14 November 2014
Daily Treasury Outlook
Key Economic Indicators
Date
11/13/2014 05:30
11/13/2014 05:45
11/13/2014 07:50
11/13/2014 07:50
11/13/2014 07:50
11/13/2014 08:01
11/13/2014 09:10
11/13/2014 09:51
11/13/2014 12:30
11/13/2014 12:30
11/13/2014 12:30
11/13/2014 13:30
11/13/2014 13:30
11/13/2014 13:30
11/13/2014 15:00
11/13/2014 15:00
11/13/2014 15:00
11/13/2014 15:00
11/13/2014 15:45
11/13/2014 15:45
11/13/2014 15:45
11/13/2014 15:45
11/13/2014 16:25
11/13/2014 17:00
11/13/2014 21:30
11/13/2014 21:30
11/13/2014 21:30
11/13/2014 22:45
11/14/2014 03:00
11/14/2014 12:00
11/14/2014 13:00
11/14/2014 14:30
11/14/2014 14:30
11/14/2014 14:30
11/14/2014 15:00
11/14/2014 15:00
11/14/2014 15:00
11/14/2014 15:30
11/14/2014 16:30
11/14/2014 17:00
11/14/2014 17:00
11/14/2014 18:00
11/14/2014 18:00
11/14/2014 18:00
11/14/2014 18:00
11/14/2014 18:00
11/14/2014 21:30
11/14/2014 21:30
11/14/2014 21:30
11/14/2014 21:30
11/14/2014 22:55
11/14/2014 11/17
11/13/2014 11/15
11/13/2014 11/15
NZ
NZ
JN
JN
JN
UK
NZ
SK
JN
JN
JN
CH
CH
CH
GE
GE
GE
GE
FR
FR
FR
FR
ID
IT
CA
US
US
US
Event
BusinessNZ Manufacturing PMI
Food Prices MoM
PPI YoY
Machine Orders MoM
Machine Orders YoY
RICS House Price Balance
REINZ House Sales YoY
BoK 7-Day Repo Rate
Industrial Production MoM
Industrial Production YoY
Capacity Utilization MoM
Retail Sales YoY
Industrial Production YTD YoY
Industrial Production YoY
CPI MoM
CPI YoY
CPI EU Harmonized MoM
CPI EU Harmonized YoY
CPI EU Harmonized MoM
CPI EU Harmonized YoY
CPI MoM
CPI YoY
Bank Indonesia Reference Rate
CPI EU Harmonized YoY
New Housing Price Index MoM
Initial Jobless Claims
Continuing Claims
Bloomberg Consumer Comfort
Oct
Oct
Oct
Sep
Sep
Oct
Oct
Nov-13
Sep F
Sep F
Sep
Oct
Oct
Oct
Oct F
Oct F
Oct F
Oct F
Oct
Oct
Oct
Oct
Nov-13
Oct F
Sep
Nov-08
Nov-01
Nov-09
Survey
--3.30%
-1.00%
-0.30%
25%
-2.00%
---11.60%
8.50%
8.00%
-0.30%
0.80%
-0.30%
0.70%
-0.10%
0.40%
-0.10%
0.40%
7.50%
0.20%
0.20%
280K
2346K
--
Actual
59.3
0.00%
2.90%
2.90%
7.30%
20%
-2.40%
2.00%
2.90%
0.80%
3.60%
11.50%
8.40%
7.70%
-0.30%
0.80%
-0.30%
0.70%
0.00%
0.50%
0.00%
0.50%
7.50%
0.20%
0.10%
290K
2392K
38.2
Prior
58.1
-0.80%
3.50%
4.70%
-3.30%
30%
-12.00%
2.00%
2.70%
0.60%
-1.70%
11.60%
8.50%
8.00%
-0.30%
0.80%
-0.30%
0.70%
-0.40%
0.40%
-0.40%
0.30%
7.50%
0.20%
0.30%
278K
2348K
38.1
Revised
58.5
-3.60%
-----------------------2356K
--
US
MA
SI
IN
FR
FR
GE
GE
GE
TH
HK
IT
IT
EC
EC
EC
EC
EC
US
US
US
CA
US
IN
CH
CH
Monthly Budget Statement
GDP YoY
Retail Sales YoY
Wholesale Prices YoY
GDP QoQ
GDP YoY
GDP SA QoQ
GDP WDA YoY
GDP NSA YoY
Foreign Reserves
GDP YoY
GDP WDA QoQ
GDP WDA YoY
CPI MoM
CPI YoY
CPI Core YoY
GDP SA QoQ
GDP SA YoY
Retail Sales Advance MoM
Retail Sales Ex Auto MoM
Import Price Index MoM
Manufacturing Sales MoM
Univ. of Michigan Confidence
Exports YoY
New Yuan Loans
Money Supply M2 YoY
Oct
3Q
Sep
Oct
3Q P
3Q P
3Q P
3Q P
3Q P
Nov-07
3Q
3Q P
3Q P
Oct
Oct F
Oct F
3Q A
3Q A
Oct
Oct
Oct
Sep
Nov P
Oct
Oct
Oct
-$122.0B
5.60%
4.10%
2.10%
0.10%
0.40%
0.10%
1.10%
1.00%
-2.00%
-0.10%
-0.40%
0.00%
0.40%
0.70%
0.10%
0.70%
0.20%
0.20%
-1.50%
1.00%
87.5
-626.4B
12.90%
-$121.7B
--------------------------
-$90.6B
6.40%
5.40%
2.38%
0.00%
0.10%
-0.20%
1.20%
0.80%
$160.6B
1.80%
-0.20%
-0.20%
0.40%
0.40%
0.70%
0.00%
0.70%
-0.30%
-0.20%
-0.50%
-3.30%
86.9
2.70%
857.2B
12.90%
----------------0.10%
0.80%
---------
Source: Bloomberg
Treasury Research & Strategy
5
14 November 2014
Daily Treasury Outlook
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Treasury Research & Strategy
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