SGD interest rates have adjusted meaningfully higher over the past few months. First, SGD rates (and SGS yields) have been rising, tagging on buoyant UST yields. Investors were also balking at very depressed yield levels and were less keen on duration risks as shown by the lacklustre interest in the recent 20Y SGS issuance. Second, we think that the bond-swap spread (BSS) may have largely normalized. This is largely to due to much larger move in SGS yields, compared to OISs. In the earlier part of the year, the BSS looked abnormal, with SORA OISs trading at a premium to SGS yields (comparatively, UST yields have consistently traded at a premium over SOFR OISs). This SGS yield premium has since been eroded. 
We think that there could be one more adjustment to go – flattening of the SORA OIS curve. The 2Y/5Y, 5Y/10Y and 2Y/10Y segments of the SORA curve are much steeper than their SOFR counterparts. We do not think that such divergence is warranted. In particular, the 2Y/5Y SOFR curve is flattish while the 2Y/5Y SORA curve is at around 40bps. We don’t think this phenomenon makes economic sense and suspect that market participants will try to flatten the SORA curve relative to the SOFR curve in the coming weeks.
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