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Variant B.1.1.529, named Omicron, was determined a 'variant of
concern' by the WHO on 26 November. By then, world stock markets
had already plunged with associated implied volatility spiking
considerably. Commodity markets were also spooked with oil prices
being hit particularly hard by month-end.
Global government yields also fell substantially by 30 November
(before the advent of Omicron, many had been on a rising, inflation
induced, trajectory).
In Singapore, just before Omicron started to dominate the news,
the MAS released its latest inflation statistics (the Consumer
Price Developments report) that showed YOY core inflation at its
highest level in over two and a half years (1.5% for October 2021).
Interestingly, at the end of the month, it was also widely reported
that the MAS had, for the first time in decades, added to
Singapore's gold reserves earlier this year.
Over November, the iBoxx SGD Overall index delivered a gain of
just over 1%. The government index outperformed the non-government
index. Longer dated SGBs were among the best performers in the
overall index (reversing their October misfortunes). Positive
returns were seen across all maturity and rating segments with
longer-dated high grade bonds performing the best.
The overall index closed the month offering a yield of 2.01%
with a duration of 7.31 years.
December 2021 Rebalance
This rebalance, S$ 4.5 billion of new notional was inserted into
the index via five new bonds. The insertions included a 2.5 billion
SIGB and a 1 billion HDB bond, both with durations of just under 5
years as of November month-end.
Meanwhile, just over S$ 850 million of bond notional (that is
expiring in less than one year) left the index via four departing
real estate bonds and an SMU bond.
Please refer to the full report for rating changes observed at
the December rebalance.
Posted 03 December 2021 by Rahul Sharma, Director - Indices, IHS Markit
IHS Markit provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.
