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Markets in September were focused on ongoing pandemic related
trials and tribulations, distress in the China real estate sector
and on the Federal Reserve meeting (21-22 September).
In the Fed's statement, Chair Powell noted that 'inflation is
elevated' but still labelled it as largely transitory. He also
discussed the moderating of FED asset purchases. Overall, the FED
adopted a hawkish stance as corroborated by its revised dot-plot
projections.
Until the Fed meeting, the iBoxx SGD Overall index traded
broadly flat in the first few weeks of September. After the
meeting, yields rose sharply in the US and (but to a lesser extent)
in Singapore, with the SGS-UST 10-year yield differential* (that
has been range trading since July) approaching zero at the close of
24 September.
By September end, the overall SGD index posted a monthly loss of
-0.92% with the government sub-index performing worse than the
non-sovereign sub-index. As in August, higher credit-quality bonds
suffered more than lower rated bonds this month. This was
especially true at the longer end of the curve.
SGD real estate related bonds with maturities ranging from three
to four years were among the best performers this month while
sovereign and sub-sovereign bonds were among the worst performers.
The high yield SGD index made a gain over September, albeit a
moderate one.
The iBoxx SGD Overall index closed the month offering a yield of
1.88% with a duration of 6.91 years.
October 2021 Rebalance
This rebalance, S$ 1.778 billion of new notional was inserted
into the index. It came via nine bonds, including two green bonds
from the National Environment Agency and an Oxley bond from July
that became index eligible following a reopening in September.
Just over S$ 10 billion of bond notional (that is expiring in
less than 1 year) left the index via six departing bonds, including
a large Singapore Government Bond.
Please refer to the full report for rating changes observed at
the October rebalance.
Posted 06 October 2021 by Rahul Sharma, Director - Indices, IHS Markit
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