Market Summary

Yield Movements

Between 1 March and 8 May, Singapore's local currency (LCY) bond yields increased for maturities from 3 months to 1 year, while they declined for tenors from 2 year to 30 years. The trade war between the People's Republic of China and the United States has weakened the Singapore dollar, resulting in declining liquidity and increased borrowing costs in the short-term. On the other hand, the overall decline in Singapore's yields may be attributed to the prospect of slower growth in the economy.

Size and Composition

The Singapore LCY bond market grew 4.2% quarter-on-quarter (q-o-q) in the first quarter (Q1) of 2019 to reach SGD420 billion (USD310 billion) at the end of March, up from SGD403 billion at the end of the fourth quarter of 2018. The expansion was supported by growth in both the government and corporate bond sectors. Total outstanding LCY government bonds increased 4.5% q-o-q in Q1 2019 to reach SGD256 billion at the end of March, up from SGD244 billion at the end of the previous quarter. LCY corporate bonds expanded 3.7% q-o-q in Q1 2019. On a year-on-year basis, corporate bonds grew 6.9% to SGD164 billion from SGD58 billion in Q4 2017.

Policy, Institutional and Regulatory Developments

In February, the Monetary Authority of Singapore and the European Commission agreed to support reforms allowing derivatives to be traded between Singapore and the European Union through each other's trading platforms. The agreement specifies that participants must comply with both European Union and Singaporean regulations when they trade derivatives in each other's markets.