Identify key factors driving interest rates. Get insights from our rates valuation monitor.
Welcome to interest rate analytics. Here we provide two sets of visualisations. First, we decompose the key macro drivers of interest rates in three key markets- Singapore, Hong Kong, and the US. In the second set of visualisations, we showcase our Emerging Markets Rates Valuation Indicator, which provides buy/sell/hold signals on a dozen countries' government bonds.
Lastest update: 14 August 2023.
For the US, we have identified 4 factors - liquidity, policy expectations, inflation expectations and term premium - that can explain movement in USD rates. Each factor is scaled from zero to 100. Higher figures point to higher upward pressure on USD rates.
For Singapore and Hong Kong, we look at the steepness of the USD curve, relative liquidity and FX dynamics. Each factor is calculated as standard deviation from mean. Higher figures point to higher upward pressure on the respective rates.
Policy expectations have stabilized as market participants price in a more resilient economy. High-for-longer inflation is also showing up in 10Y breakevens. As expectations of the end of the Fed cycle builds, increased optimism has also led to an increase of term premium.
The key factors impacting SGD interest rates have been relatively stable compared to three months ago. SGD liquidity is still relatively flush.
The USDHKD is no longer hugging the top of the band. As FX pressures ease, HIBOR has also settled lower relative to USD rates.
Lastest update: 14 August 2023.
ERVI estimates the extent of over or under-valuation of 10Y EM local-currency bonds,
based on fundamentals such as external funding and inflation risks.Â Positive values
indicate that bonds are rich (or over-valued), while negative values indicate that
bonds are cheap (or under-valued). Investors can use our ERVI to make positioning
decisions for their portfolios, by going underweight on the richer bonds and going
overweight on the cheaper bonds.
For more in-depth description on the workings of our model, please refer to Introductory Report
The EM space is skewed towards overvaluation. That said, in the near term, risk sentiments towards EM are generally positive and conducive for EM bonds to rally further against US Treasuries. Inflation differentials could keep improving, as US inflation stays stickier vs broad disinflation trend in most of EM. The impact of weaker external demand and energy prices on EM current accounts would vary across EM economies.
Our ERVI suggests that Malaysia, Thailand, Korea, Mexico and India are extremely overvalued relative to US Treasuries while Brazil is undervalued.
GENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the âCompanyâ). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at [email protected] for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-878-9999. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queenâs Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queenâs Road Central, Central, Hong Kong SAR.