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Friday, January 23, 2015
ECB gave global markets a risk-on shot, announcing QE amounting to
EUR60b per month at least until Sep 2016, amounting to over EUR1.1tn, till
inflation is back to its 2% target. It was clear that financial markets were
pleased, with EUR taking another leg lower. The ECB also cut the financing
cost of TLTRO by 10bps, adding to the string of central banks that had
announced surprise cuts in the past week (namely Denmark, Turkey, India,
Canada and Peru). With the ECB’s new QE ammunition, market players may
be emboldened in their global search for yield to drive equities and gold
higher, government and likely corporate bond yields lower, and lift German
asset prices even higher since Germany will dominate the bulk of the QE
program.
For today, Asian markets are likely to cheer the ECB’s QE present and await
the slew of manufacturing PMIs from US/EZ/China. The passing of Saudi
Arabia’s King Abdullah also saw oil futures trade higher.
The finer technical details include capping QE at 25% per issue volume and
33% per issuer, risk-sharing with national central banks (80%), and excluding
Greek bonds till July (a rather smart political move) when redemptions of
SMP bonds held by ECB would not exceed the 33% issuer limit. The
EUR60bn also likely comprises EUR45bn of sovereign bond purchases, with
EUR5bn bonds issued by European institutions and agencies, and EUR10bn
under existing ABS and covered bonds for tenors between 2-30 years. Subzero bond yields will not be excluded, but purchases will be proportionate to
their capital keys (ie. Germany 25.6%).
JTC Corp has introduced new industrial price and rental indices from the
previous 6 to 24, including single-user factory space as well as sub-indices
for multiple-user factories, business parks and warehouses island wide. This
follows the Fair Tenancy Framework launch on Tuesday. Meanwhile, Dec
CPI likely saw its second straight month of negative print at -0.1% yoy (-0.1%
mom sa), amid the oil price slump, with core CPI at 1.6% yoy (close to the
21-month low of 1.5% seen in Nov 2014).
China’s currency regulator said yesterday the supply and demand for foreign
currencies remains fairly balanced in 2014. There is no sign of panic hoarding
of US dollar. The SAFE expects RMB assets to stay attractive to foreign
investors in the medium term due to China’s relatively higher interest rates.
Headline CPI inflation eased to 4.9% yoy in December from 5.1% yoy in
November. Underlying CPI inflation also slowed to 3.1% yoy from 3.3% yoy
for the same period.
The Korean economy expanded 0.4% qoq sa (+2.7% yoy) in 4Q14, marking
a slowdown from the 3Q print of +0.9% qoq sa (+3.2% yoy).
Crude oil prices remained under-water, with WTI and Brent sinking to
$46.31/bbl (-3.1%) and $48.52/bbl (-1.04%) at closing yesterday on swelling
US oil inventories. Meanwhile, gold investors disregarded the dollar strength,
owing from the weakening Euro after ECB’s QE announcement, and led the
yellow metal higher to $1,300.7/oz (+0.54%).
23 January 2015
Daily Treasury Outlook
Major Market

Wall Street rallied for the fourth day amid the ECB’ QE present and better-than-expected
earnings from banks and transportation companies: Dow +1.48%, S&P500 +1.53% (erasing its
loss for the year) and Nasdaq +1.78%. Gainers included KeyCorp, Southwest Airlines Co, Union
Pacific Corp, and EBay Inc. VIX -13.00% to 16.40 (lowest this year).

US Treasury bond markets slipped as anticipation of ECB stimulus lent a risk-on tone to
equities: The 2- and 10-year bond yields were at 0.52% and 1.86% (-1bp) respectively. The
Treasury will auction US$26bn 2-year notes, US$35bn 5-year notes and US$29bn 7-year notes from
27 Jan. Note German 2-year note yields saw a record low of 0.182%, with Spanish 10-year yield
also at a record 1.397% and Italy’s 10-year at 1.556% (low since at least 1993), on the back of the
ECB announcement.

Singapore: STI added 0.47% to close at 3370.29 yesterday, and may attempt to extend gains this
morning given the upside surprise from the ECB announcement and strong overnight increase in
Wall Street and morning rallies in Nikkei and Kospi, albeit some profit-taking may emerge ahead of
the weekend. STI range is tipped at 3360-3400 for today. SGS bond, particularly the longer-dated
ones, will likely benefit from the ECB’s QE halo effect, and see yields dip around 2-4bps in
sympathy.

Hong Kong: The slowdown in CPI inflation in the month was mainly attributed to an accelerated
drop in fuel and clothing prices. Looking forward, we expect inflation pressures in HK would ease
gradually in the coming months on the back of lower fuel prices and slower domestic growth
weighed down by the weak retail sector. Upward pressure would mainly come from rising private
residential rental growth.

Thailand: The parliament is to decide on impeachment charges against former Prime Minister
Yingluck Shinawatra today, a move that may land her a maximum of 10-years imprisonment and ban
her from politics for 5 years.

Commodities: Crude oil futures remained under water, with WTI and Brent sinking to $46.31/bbl (3.1%) and $48.52/bbl (-1.04%) at closing yesterday. The fall is largely triggered by swelling US oil
inventories, with US crude oil stocks rising way above expectations at 10.1 million barrels (vs mkt
est: +2.7 million barrels ) for the week ended Jan 16. Meanwhile, US oil refinery utilisations operated
at 85.5% (-5.5%) over the same period of time, as units were reportedly closed for maintenance.
Economic Data Releases

Key economic data releases: US’ initial jobless claims fell 10k to 307k, while continuing claims
came in at 2.443m, suggesting labour market conditions remain robust. Meanwhile, the FHFA house
price index surged from a revised 0.4% in Oct to 0.8% mom in Nov, raising hopes that a more
sustainable housing recovery is underway. In the Eurozone, consumer confidence improved to -8.5
in Jan as consumers welcomed lower inflation.

Key economic data due today: US’ Dec existing home sales and Chicago Fed national activity;
Canada’s CPI and retail sales; UK’s retail sales; Taiwan’s Dec industrial production; and Singapore’s
CPI.
Treasury Research & Strategy
2
23 January 2015
Daily Treasury Outlook
Bond Market Updates

Market Commentary: Yesterday, the SGD swap rates traded 1bps-7bps higher across the curve,
with the exception of 1-year rate that dropped 1bps. The SGD corporate space was active with
better buyers of GRCHAR 6% ’17, IOCLIN 4.1% ’22, HYFSP 4.8% perp-c16, GALVSP 5.9% ’17,
YLLGSP 6.2% ’17 and HYFSP 5.75% perp-c17. Meanwhile, we also saw better sellers of CHEUNG
5.125% perp-c16, OLAMSP 4.25% ‘19 and mixed interest in BIGSP 4.875% ’17 and EZISP
4.875% ’21.

New Issues: Haitong International Securities Group Ltd priced a US$700mn 5.5-yr issue at
CT5+310bps. International Container Terminal Services Inc is planning a US$ perp-nc4.25 issue,
with a final price guidance of 6.5%.

Rating Changes: Fitch downgraded Anton Oilfield Services Group’s long-term issuer default rating
and senior unsecured rating to “BB-” from “BB”, with a negative outlook.
Treasury Research & Strategy
3
23 January 2015
Daily Treasury Outlook
Key Financial Indicators
Foreign Exchange
Day Close % Change
DXY
94.077
1.26%
USD-JPY
118.490
0.44%
EUR-USD
1.1366
-2.10%
AUD-USD
0.8026
-0.73%
GBP-USD
1.5010
-0.87%
USD-MYR
3.6017
-0.43%
USD-CNY
6.2090
-0.05%
USD-IDR
12487
0.05%
USD-VND
21360
-0.09%
USD-SGD
EUR-SGD
JPY-SGD
GBP-SGD
AUD-SGD
NZD-SGD
CHF-SGD
SGD-MYR
SGD-CNY
Day Close % Change
1.3394
0.34%
1.5223
-1.77%
1.1304
-0.12%
2.0106
-0.55%
1.0751
-0.38%
1.0050
-0.31%
1.5374
-0.90%
2.7018
-0.20%
4.6360
-0.32%
Equity and Commodity
Index
Value
DJIA
17,813.98
S&P
2,063.15
Nasdaq
4,750.40
Nikkei 225
17,329.02
STI
3,370.29
KLCI
1,781.75
JCI
5,253.18
Baltic Dry
751.00
VIX
16.40
Interbank Offer Rates (%)
Tenor
EURIBOR
1M
-0.0040
2M
0.0220
3M
0.0550
6M
0.1410
9M
0.2130
12M
0.2830
Change
-------
Tenor
O/N
1M
2M
3M
6M
12M
USD Libor
0.1214
0.1668
0.2158
0.2571
0.3589
0.6219
Government Bond Yields (%)
Tenor
SGS (chg)
UST (chg)
2Y
0.61 (+0.01) 0.52 (+0.01)
5Y
1.39 (+0.05) 1.36 (+0.01)
10Y
1.96 (+0.07) 1.86 (-0.01)
15Y
2.34 (+0.08)
-20Y
2.43 (+0.08)
-30Y
2.54 (+0.08) 2.44 (-0.02)
Singapore Rates (%)
Tenor
SOR Fixing
1D
0.1319
1M
0.4264
3M
0.5140
6M
0.6094
Change
0.0687
-0.0072
0.0104
-0.0178
Tenor
1M
3M
6M
12M
Change
-------
Financial Spread (bps)
Value
LIBOR-OIS
13.11
EURIBOR-OIS
11.00
TED
24.09
SGD SIBOR Change
0.5733
-0.0021
0.6387
-0.7009
0.0021
0.8221
-0.0012
Net change
259.70
31.00
83.00
48.50
15.80
11.70
37.90
-19.00
-2.50
Change
-0.16
0.50
0.41
Eurozone & Russia Update
2Y Bond Ylds (bpschg) 10Y Bond Ylds (bpschg)
Portugal
Italy
Ireland
Greece*
Spain
Russia*
0.29
0.31
0.07
10.34
0.26
6.70
-9.20
-7.30
0.00
-74.90
-7.10
-17.90
2.59
1.55
1.15
8.97
1.41
5.08
-18.40
-14.20
-10.00
-39.70
-12.50
0.00
10Y Bund
Spread %
2.14
1.10
0.70
8.52
0.96
4.63
CDS
169.52
107.43
49.88
452.30
79.94
561.54
CDS
Change
-12.49
-9.97
0.10
--5.37
-14.25
Equity
Index
2323.84
20469.74
5461.97
791.80
10510.60
1666.56
% Change
1.80
2.44
1.33
1.14
1.70
48.39
* Shows 3-year bond yields rather than 2-year
Commodities Futures
Energy
WTI (per barrel)
Brent (per barrel)
Heating Oil (per gallon)
Gasoline (per gallon)
Natural Gas (per MMBtu)
Futures
46.31
48.52
1.638
1.33
2.835
-3.08%
-1.04%
-0.52%
0.40%
-4.67%
Soft Commodities
Coffee (per lb)
Cotton (per lb)
Sugar (per lb)
Orange Juice (per lb)
Cocoa (per mt)
Futures
1.600
0.5776
0.1591
1.4695
2,801
% chg
-0.81%
-0.43%
-0.06%
0.14%
-1.79%
Base Metals
Copper (per mt)
Nickel (per mt)
Aluminium (per mt)
Futures
5,665.0
14,809
1,859.0
% chg
-1.84%
-1.21%
-0.47%
Grains
Wheat (per bushel)
Soybean (per bushel)
Corn (per bushel)
Futures
5.3375
9.768
3.8375
% chg
-0.56%
-0.69%
-1.10%
Precious Metals
Gold (per oz)
Silver (per oz)
Futures
1,300.7
18.346
% chg
0.54%
0.92%
Asian Commodities
Crude Palm Oil (MYR/MT)
Rubber (JPY/KG)
Futures
2,272.0
188.2
% chg
-0.83%
1.73%
Source: Bloomberg, Reuters
(Note that rates are for reference only)
Treasury Research & Strategy
4
23 January 2015
Daily Treasury Outlook
Key Economic Indicators
Date
22/01/2015 05:30
22/01/2015 07:50
22/01/2015 07:50
22/01/2015 07:50
22/01/2015 08:00
22/01/2015 08:30
22/01/2015 16:30
22/01/2015 17:00
22/01/2015 17:00
22/01/2015 17:00
22/01/2015 17:00
22/01/2015 17:30
22/01/2015 17:30
22/01/2015 17:30
22/01/2015 18:00
22/01/2015 18:00
22/01/2015 18:00
22/01/2015 20:45
22/01/2015 20:45
22/01/2015 20:45
22/01/2015 21:30
22/01/2015 21:30
22/01/2015 22:00
22/01/2015 22:45
22/01/2015 22:45
22/01/2015 23:00
23/01/2015 07:00
23/01/2015 07:00
23/01/2015 09:35
23/01/2015 09:45
23/01/2015 13:00
23/01/2015 13:00
23/01/2015 15:30
23/01/2015 15:30
23/01/2015 15:45
23/01/2015 15:45
23/01/2015 15:45
23/01/2015 16:00
23/01/2015 16:00
23/01/2015 16:00
23/01/2015 16:00
23/01/2015 16:30
23/01/2015 16:30
23/01/2015 16:30
23/01/2015 17:00
23/01/2015 17:00
23/01/2015 17:00
23/01/2015 17:30
23/01/2015 17:30
23/01/2015 17:30
23/01/2015 17:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 21:30
23/01/2015 22:45
23/01/2015 23:00
23/01/2015 23:00
23/01/2015 23:00
23/01/2015
NZ
JN
JN
JN
AU
TA
HK
IT
IT
IT
IT
UK
UK
UK
MA
IT
IT
EC
EC
EC
US
US
US
US
US
EC
Event
BusinessNZ Manufacturing PMI
Japan Buying Foreign Bonds
Foreign Buying Japan Bonds
Foreign Buying Japan Stocks
HIA New Home Sales MoM
Unemployment Rate
CPI Composite YoY
Industrial Orders MoM
Industrial Orders NSA YoY
Industrial Sales MoM
Industrial Sales WDA YoY
Public Finances (PSNCR)
Public Sector Net Borrowing
PSNB ex Banking Groups
Foreign Reserves
Retail Sales MoM
Retail Sales YoY
ECB Main Refinancing Rate
ECB Deposit Facility Rate
ECB Marginal Lending Facility
Initial Jobless Claims
Continuing Claims
FHFA House Price Index MoM
Bloomberg Consumer Comfort
Bloomberg Economic Expectations
Consumer Confidence
Dec
16-Jan
16-Jan
16-Jan
Nov
Dec
Dec
Nov
Nov
Nov
Nov
Dec
Dec
Dec
15-Jan
Nov
Nov
22-Jan
22-Jan
22-Jan
17-Jan
10-Jan
Nov
18-Jan
Jan
Jan A
Survey
-----3.87%
4.60%
0.40%
-0.60%
---9.0B
9.7B
-0.10%
-0.90%
0.05%
-0.20%
0.30%
300K
2400K
0.30%
---10.5
Actual
57.7
-¥397.2B
-¥233.7B
-¥577.4B
2.20%
3.84%
4.90%
-1.10%
-4.10%
-0.60%
-1.60%
21.4B
12.5B
13.1B
$111.2B
0.10%
-2.30%
0.05%
-0.20%
0.30%
307K
2443K
0.80%
44.7
53
-8.5
Prior
55.2
¥455.1B
-¥121.3B
-¥684.4B
3.00%
3.87%
5.10%
0.10%
-0.20%
0.40%
-0.70%
6.7B
13.4B
14.1B
$116.0B
0.00%
-0.80%
0.05%
-0.20%
0.30%
316K
2424K
0.60%
45.4
51
-10.9
Revised
55.6
¥464.6B
-¥128.7B
-¥679.9B
-----0.30%
-7.1B
11.7B
12.4B
---1.00%
---317K
2428K
0.40%
----
SK
SK
JN
CH
SI
SI
TH
TH
FR
FR
FR
TA
FR
FR
FR
GE
GE
GE
EC
EC
EC
UK
UK
UK
UK
US
CA
CA
CA
CA
CA
CA
US
US
US
US
MU
GDP SA QoQ
GDP YoY
Markit/JMMA Japan Mfg PMI
HSBC China Manufacturing PMI
CPI NSA MoM
CPI YoY
Forward Contracts
Foreign Reserves
Own-Company Production Outlook
Production Outlook Indicator
Manufacturing Confidence
Industrial Production YoY
Markit France Manufacturing PMI
Markit France Services PMI
Markit France Composite PMI
Markit/BME Germany Mfg PMI
Markit Germany Services PMI
Markit/BME Germany Cpste PMI
Markit Eurozone Mfg PMI
Markit Eurozone Services PMI
Markit Eurozone Composite PMI
Retail Sales Ex Auto MoM
Retail Sales Ex Auto YoY
Retail Sales Incl. Auto MoM
Retail Sales Incl. Auto YoY
Chicago Fed Nat Activity Index
CPI NSA MoM
CPI YoY
CPI Core MoM
CPI Core YoY
Retail Sales MoM
Retail Sales Ex Auto MoM
Markit US Manufacturing PMI
Existing Home Sales
Existing Home Sales MoM
Leading Index
Visitor Arrivals
4Q P
4Q P
Jan P
Jan P
Dec
Dec
16-Jan
16-Jan
Jan
Jan
Jan
Dec
Jan P
Jan P
Jan P
Jan P
Jan P
Jan P
Jan P
Jan P
Jan P
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Nov
Nov
Jan P
Dec
Dec
Dec
Dec
0.40%
2.80%
-49.5
-0.20%
-0.10%
----99
4.68%
48
50.8
50.1
51.7
52.5
52.4
51
52
51.7
-0.70%
3.40%
-0.60%
3.00%
0.48
-0.60%
1.60%
-0.30%
2.30%
-0.20%
0.10%
54
5.08M
3.00%
0.40%
--
0.40%
2.70%
------------------------------------
0.90%
3.20%
52
49.6
0.30%
-0.30%
$23.0B
$156.6B
4
-16
99
6.86%
47.5
50.6
49.7
51.2
52.1
52
50.6
51.6
51.4
1.70%
6.90%
1.60%
6.40%
0.73
-0.40%
2.00%
-0.20%
2.10%
0.00%
0.20%
53.9
4.93M
-6.10%
0.60%
2802T
-------------------------0.92
------------
Source: Bloomberg
Treasury Research & Strategy
5
23 January 2015
Daily Treasury Outlook
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Treasury Research & Strategy
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