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DAILY TREASURY OUTLOOK
Treasury Research
Selena Ling
+65 6530-4887
LingSSSelena@ocbc.com
Emmanuel Ng
+65 6530-4073
NgCYEmmanuel@ocbc.com
Wellian Wiranto
+65 6530-5949
WellianWiranto@ocbc.com
Tommy Xie Dongming
+65 6530-7256
XieD@ocbc.com
Barnabas Gan
+65 6530-1778
BarnabasGan@ocbc.com
OCBC Credit Research:
Lee Chok Wai
+65 6722-2215
ChokWaiLee@ocbc.com
Wednesday, October 15, 2014
Highlights




OCBC Wing Hang:
Iris Pang
+852 2852-5289
IrisPang@ocbcwh.com
Timothy Sham
+852 2852-5791
TimothyPYSham@ocbcwh.com
Treasury Advisory
Corporate FX & Structured
Products
Tel: 6349-1888 / 1881
Interest Rate Derivatives
Tel: 6349-1899
Investments & Structured
Products
Tel: 6349-1886
GT Institutional Sales
Tel: 6349-1810


The 4% rout in crude oil prices overnight, as the IEA cut its demand
outlook for this year to the slowest pace since 2009 amid rising
demand, and growing signs of Eurozone weakness also weighed on
market sentiments. The German Economy Ministry trimmed its 2014
and 2015 growth forecasts to 1.2% and 1.5% respectively (previously
1.8% and 2.0% in Apr), while indicators revealed falling inflation in
Sweden and Spain, a 5-year low of 1.2% in UK inflation, and the German
th
ZEW survey expectations gauge slumped for a 10 month from 6.9 to -3.6
(low since Nov 2012) while the current situation gauge declined from 25.4
to 3.2 (below its 10-year average for the first time since Jun 2013).
Separately, the Energy Department estimates that the US is adding an
unprecedented 1.1m barrels a day this year, while OPEC had lifted Sep
output to a 1-year high of 30.935m barrels a day. For today, watch for the
BOK policy meeting where a 25bp rate cut to 2% is likely.
Key economic data releases: US’ NFIB small business optimism fell
from 96.1 to 95.3 in Sep. Meanwhile Eurozone’s industrial production fell
1.9% yoy (-1.8% mom sa) in Aug and its ZEW survey expectations gauge
also slumped from 14.2 to 4.1 in Oct, suggesting that growth prospects
were quickly fading amid geopolitical tensions. Elsewhere, South Korea’s
unemployment rate was steady at 3.5% in Sep, while Australia’s Westpac
consumer confidence index rebounded 0.9% mom sa in Oct after falling
4.6% in Sep.
Economic data calendar for today: US’ Sep retail sales, Oct Empire
manufacturing and PPI; UK’s Aug ILO unemployment rate and Sep
jobless claims; and China’s Sep CPI/PPI.
Wall Street’s early gains faded late session with the oil complex
taking another leg down: Dow -0.04%, S&P500 +0.16% (after closing
below its 200-day average for the first time in two years) and Nasdaq
+0.32%. Weakness was prevalent among energy stocks like Chevron
Corp, Schlumberger Ltd and ConocoPhillips, which wiped out the early
gains in industrials, airlines and financials. Citigroup Inc’s profit rose 6.6%
(ahead of analyst estimates) and announced plans to exit consumer
banking in 11 markets. JPMorgan also reported a 3Q profit, but missed
analyst estimates on legal and regulatory costs, whereas Wells Fargo &
Co’s 3Q profit matched analysts’ estimates amid slower mortgage
banking revenue. VIX -7.51% to 22.79.
US Treasury bond yields continue to test fresh year-to-date lows,
amid renewed market speculation that the Eurozone drag will delay
potential FOMC rate hikes: The 2- and 10-year bond yields were at
0.37% (-6bps in its biggest rally in more than a year) and 2.20% (-8bps)
respectively, with the 30-year bond yield also dipped 6bps to 2.95%
(below 3% for the first time since 3 May 2013). Fed’s Mester said that
recent risks have not altered the outlook.
China: Chinese central bank lowered the 14-day repo rate for the third
time this year in its regular open market operation yesterday. Though the
15 October 2014
Daily Treasury Outlook


cut has limited direct impact on the economy, it is more of a symbolic
move to show China’s intention to lower the funding cost.
Singapore: Aug retail sales likely rose 3.7% yoy and 2.9% mom in Aug.
Indonesia: President-elect Jokowi held a meeting with Aburizal Bakrie of
the Golkar party yesterday amidst attempts to patch up political
differences. While Bakrie insisted that Golkar will remain within the
opposition KMP coalition, he denied that he would be supporting a plan to
impeach Jokowi in the future.
Major Markets

Singapore: The STI fell 0.24% yesterday to end at 3194.40, but may see
some relief today as Wall Street stabilizes. STI could trade within a range
of 3180-3220 today. The SGS bond yield curve steepened as global
growth concerns abound and investors snap up short-dated bonds.

Malaysia: The KLCI ended yesterday’s trading session at 1796.38 level,
just 0.05% shade lower. As global market appears to have found some
footing overnight, the bourse may experience less headwind today.
Bond Market Update
Treasury Research & Strategy

Market Commentary: Yesterday, the SGD swap rates traded only 2bp3bp lower across the curve despite a rally in UST. In the SGD corporate
bonds space, there were sellers of papers such as EZRASP 4.875% ’18
and HPLSP 3.95% ’19. Meanwhile, there were small buyers of CAPLSP
4.3% ’20 and OUESP 4.25% ’19c16.

New Issues: Korean Reinsurance Co priced a US$200mn 30nc5 issue at
CT5+314.7bp. Power Construction Corp of China Ltd priced a US$500mn
perp-nc5 issue at 4.05%. China Travel Service Holdings Hong Kong Ltd is
planning a new USD issue with investor meetings commencing tomorrow.
The UK Government priced a RMB3bn 3-year issue at 2.7%. Yunnan
Provincial Energy Investment Group Co Ltd is planning a CNH 3-year
issue with final price guidance at 5.5%-5.6% area.

Rating Changes: S&P downgraded the long-term corporate credit rating
of Agile Property Holdings Ltd to “BB-” from “BB”, with the rating
remaining on CreditWatch with negative implications. Moody’s upgraded
the long-term issuer rating of Daiwa Securities Co Ltd to “A3” from
“Baa2”, with a stable outlook.
2
15 October 2014
Daily Treasury Outlook
Key Financial Indicators
Foreign Exchange
Day Close % Change
DXY
85.822
0.34%
USD-JPY
107.050
0.18%
EUR-USD
1.2658
-0.74%
AUD-USD
0.8713
-0.67%
GBP-USD
1.5904
-1.13%
USD-MYR
3.2675
0.18%
USD-CNY
6.1248
-0.02%
USD-IDR
12206
0.04%
USD-VND
21220
0.02%
USD-SGD
EUR-SGD
JPY-SGD
GBP-SGD
AUD-SGD
NZD-SGD
CHF-SGD
SGD-MYR
SGD-CNY
Day Close % Change
1.2761
0.31%
1.6152
-0.43%
1.1919
0.12%
2.0292
-0.83%
1.1117
-0.38%
1.0007
-0.33%
1.3379
-0.29%
2.5656
0.04%
4.8020
-0.29%
Equity and Commodity
Index
Value Net change
DJIA
16,315.19
-5.90
S&P
1,877.70
3.00
Nasdaq
4,227.17
13.50
Nikkei 225 14,936.51
-364.00
STI
3,194.40
-7.80
KLCI
1,796.38
-0.80
JCI
4,922.58
9.50
Baltic Dry
948.00
-6.00
VIX
22.79
-1.90
Interbank Offer Rates (%)
Tenor
EURIBOR
1M
0.0060
2M
0.0440
3M
0.0820
6M
0.1820
9M
0.2520
12M
0.3360
Change
-------
Tenor
O/N
1M
2M
3M
6M
12M
USD Libor
0.0905
0.1533
0.1950
0.2306
0.3211
0.5473
Government Bond Yields (%)
Tenor
SGS (chg)
UST (chg)
2Y
0.50 (--) 0.37 (-0.06)
5Y
1.44 (--) 1.44 (-0.09)
10Y
2.27 (--) 2.20 (-0.08)
15Y
2.64 (--)
-20Y
2.78 (--)
-30Y
2.90 (--) 2.95 (-0.06)
Singapore Rates (%)
Tenor
SOR Fixing
1D
0.0587
1M
0.1629
3M
0.2385
6M
0.3182
Change
-0.0170
0.0011
0.0047
0.0022
Tenor
1M
3M
6M
12M
Change
-------
Financial Spread (bps)
Value
LIBOR-OIS
14.66
EURIBOR-OIS
9.60
TED
22.40
SGD SIBOR Change
0.3614
-0.4095
-0.4952
-0.6267
--
Change
-0.63
0.90
-0.15
Eurozone & Russia Update
2Y Bond Ylds (bpschg) 10Y Bond Ylds (bpschg)
Portugal
Italy
Ireland
Greece*
Spain
Russia*
0.60
0.44
0.04
4.23
0.37
3.28
1.70
1.20
-0.10
18.50
-0.50
2.10
3.07
2.30
1.66
7.01
2.05
5.08
2.90
-3.60
-5.80
30.70
-3.70
-4.50
10Y Bund
Spread %
2.23
1.46
0.83
6.17
1.21
4.24
CDS
163.46
104.26
53.99
452.30
78.47
251.17
CDS
Change
-0.12
1.17
1.32
--0.99
-4.99
Equity
Index
2348.12
19155.85
4497.76
948.21
10204.90
1394.16
% Change
0.03
0.09
0.79
-5.70
0.17
10.23
* 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
81.84
85.04
2.472
2.18
3.816
% chg
-4.55%
-4.33%
-3.31%
-3.33%
-2.55%
Soft Com m odities
Coffee (per lb)
Cotton (per lb)
Sugar (per lb)
Orange Juice (per lb)
Cocoa (per mt)
Futures
2.219
0.6416
0.1681
1.3425
3,102
% chg
1.74%
-1.32%
0.84%
0.75%
1.41%
Base Metals
Copper (per mt)
Nickel (per mt)
Aluminium (per mt)
Futures
6,800.0
16,302
1,936.0
% chg
1.34%
-0.42%
1.04%
Grains
Wheat (per bushel)
Soybean (per bushel)
Corn (per bushel)
Futures
5.0925
9.648
3.5700
% chg
0.79%
2.06%
3.18%
Precious Metals
Gold (per oz)
Silver (per oz)
Futures
1,233.6
17.422
% chg
0.35%
0.34%
Asian Com m odities
Crude Palm Oil (MYR/MT)
Rubber (JPY/KG)
Futures
2,193.0
177.0
% chg
0.27%
3.21%
Source: Bloomberg, Reuters
(Note that rates are for reference only)
Treasury Research & Strategy
3
15 October 2014
Daily Treasury Outlook
Key Economic Indicators
Date
10/14/2014 07:50
10/14/2014 07:50
10/14/2014 07:50
10/14/2014 08:00
10/14/2014 08:00
10/14/2014 08:30
10/14/2014 08:30
10/14/2014 14:30
10/14/2014 14:45
10/14/2014 14:45
10/14/2014 14:45
10/14/2014 14:45
10/14/2014 16:00
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 16:30
10/14/2014 17:00
10/14/2014 17:00
10/14/2014 17:00
10/14/2014 17:00
10/14/2014 19:30
10/14/2014 20:41
10/15/2014 07:00
10/15/2014 07:30
10/15/2014 09:00
10/15/2014 09:30
10/15/2014 09:30
10/15/2014 12:30
10/15/2014 12:30
10/15/2014 12:30
10/15/2014 13:00
10/15/2014 14:00
10/15/2014 14:00
10/15/2014 14:00
10/15/2014 14:00
10/15/2014 14:00
10/15/2014 16:30
10/15/2014 16:30
10/15/2014 16:30
10/15/2014 19:00
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 20:30
10/15/2014 23:00
10/15/2014
10/15/2014
10/14/2014 10/15
10/14/2014 10/15
JN
JN
JN
SI
SI
AU
AU
IN
FR
FR
FR
FR
IT
UK
UK
UK
UK
UK
UK
UK
UK
GE
GE
EC
EC
US
IN
Event
PPI YoY
Money Stock M2 YoY
Money Stock M3 YoY
GDP SAAR QoQ
GDP YoY
NAB Business Confidence
NAB Business Conditions
Wholesale Prices YoY
CPI EU Harmonized MoM
CPI EU Harmonized YoY
CPI MoM
CPI YoY
CPI EU Harmonized YoY
CPI MoM
CPI YoY
CPI Core YoY
Retail Price Index
RPI MoM
RPI YoY
PPI Output NSA MoM
PPI Output NSA YoY
ZEW Survey Current Situation
ZEW Survey Expectations
ZEW Survey Expectations
Industrial Production SA MoM
NFIB Small Business Optimism
Exports YoY
Sep
Sep
Sep
3Q A
3Q A
Sep
Sep
Sep
Sep
Sep
Sep
Sep
Sep F
Sep
Sep
Sep
Sep
Sep
Sep
Sep
Sep
Oct
Oct
Oct
Aug
Sep
Sep
Survey
3.60%
2.90%
2.40%
0.80%
2.70%
--3.24%
-0.30%
0.40%
-0.30%
0.40%
-0.20%
0.20%
1.40%
1.80%
257.9
0.30%
2.30%
-0.10%
-0.30%
15
0
--1.60%
95.8
--
Actual
3.50%
3.00%
2.50%
1.20%
2.40%
5
1
2.38%
-0.40%
0.40%
-0.40%
0.30%
-0.10%
0.00%
1.20%
1.50%
257.6
0.20%
2.30%
-0.10%
-0.40%
3.2
-3.6
4.1
-1.80%
95.3
2.70%
Prior
3.90%
3.00%
2.40%
0.10%
2.40%
8
4
3.74%
0.50%
0.50%
0.40%
0.40%
-0.20%
0.40%
1.50%
1.90%
257
0.40%
2.40%
-0.10%
-0.30%
25.4
6.9
14.2
1.00%
96.1
2.40%
Revised
--2.50%
-0.10%
-7
3
-----------------0.90%
---
SK
AU
SK
CH
CH
JN
JN
JN
SI
GE
GE
GE
GE
JN
UK
UK
UK
US
US
US
US
US
US
US
US
US
PH
PH
CH
CH
Unemployment rate SA
Westpac Consumer Conf SA MoM
BoK 7-Day Repo Rate
PPI YoY
CPI YoY
Industrial Production MoM
Industrial Production YoY
Capacity Utilization MoM
Retail Sales YoY
CPI MoM
CPI YoY
CPI EU Harmonized MoM
CPI EU Harmonized YoY
Machine Tool Orders YoY
Claimant Count Rate
Jobless Claims Change
ILO Unemployment Rate 3Mths
MBA Mortgage Applications
Empire Manufacturing
Retail Sales Advance MoM
Retail Sales Ex Auto MoM
PPI Final Demand MoM
PPI Ex Food and Energy MoM
PPI Final Demand YoY
PPI Ex Food and Energy YoY
Monthly Budget Statement
Overseas Remittances YoY
Overseas Workers Remittances
New Yuan Loans
Money Supply M2 YoY
Sep
Oct
Oct-15
Sep
Sep
Aug F
Aug F
Aug
Aug
Sep F
Sep F
Sep F
Sep F
Sep F
Sep
Sep
Aug
Oct-10
Oct
Sep
Sep
Sep
Sep
Sep
Sep
Sep
Aug
Aug
Sep
Sep
3.50%
-2.00%
-1.60%
1.70%
---3.90%
0.00%
0.80%
0.00%
0.80%
-2.80%
-35.0K
6.10%
-20.25
-0.10%
0.20%
0.10%
0.10%
1.80%
1.70%
$90.0B
5.90%
$2056M
750.0B
13.00%
3.50%
0.90%
2.00%
----------------------------
3.50%
-4.60%
2.25%
-1.20%
2.00%
-1.50%
-2.90%
-0.80%
5.50%
0.00%
0.80%
0.00%
0.80%
34.80%
2.90%
-37.2K
6.20%
3.80%
27.54
0.60%
0.30%
0.00%
0.10%
1.80%
1.80%
$75.1B
6.00%
$2063M
702.5B
12.80%
-------------------------------
Source: Bloomberg
Treasury Research & Strategy
4
15 October 2014
Daily Treasury Outlook
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