Would Singapore ever change its peg to US Fed rate??

[phantom_opera]

http://upload.wikimedia.org/wikipedia/commons/thumb/3/31/Federal_Funds_Rate_1954_thru_2009_effective.svg/640px-Federal_Funds_Rate_1954_thru_2009_effective.svg.png

US Fed fund rate from 1954 to 2009 ...... if the peak of US glorious day was over ... you will expect the rate to stay near zero similar to Japan as US runs out of weapons that can drive growth (1998-2000 was NASDAQ boom, 2004-2008 was sub-prime boom)

Singapore interest rate has high correlation with US Fed rate except when there is local event that results in extreme swing (e.g. 1997 Asian currency crisis)

US Fed has indicated that US Fed rate will not go up till at least 2014 ....however, this time around US seems to run out of idea on how to re-inflate its economy out of shit and the Euro-crisis only added to its burden

So potentially US Fed rate could stay near zero for 10y, 15y, 20y. This will spell big trouble for Singapore. As long as Singapore continues to deliver moderate growth, inflation will stay high but SIBOR will stay at 0.4% for many years to come. Middle class will be harmed the most since they normally have cash savings all in the bank while upper middle class / the rich can diversify and stay invested. Due to fear of money losing value, lots of people may also invest in property market (especially MMs) and result in huge bubble.

Do you think Singapore can ever change its financial system to unpeg from US Fed rate?? Since nobody has ever suggested this in the press, this must be a very difficult change and may have serious implication.

How would all these end? This must be the most confusing era in our lifetime :confused:

[amk]

We need another Richard Hu to think of somethng out of the box. no one even dared to question the peg, let alone changing it.
And yes th situation now benefits the rich tremendously. Cheap credit means "free money". While the middle class are struggling to deal with inflation and try to invest into something to beat inflation, the rich is borrowing free money and enrich themselves easily.

[3C]

This will only end when the US dollar is no more the world reserve currency.
It will takes time, maybe gold will shine for the interim.

[phantom_opera]

We need another Richard Hu to think of somethng out of the box. no one even dared to question the peg, let alone changing it.
And yes th situation now benefits the rich tremendously. Cheap credit means "free money". While the middle class are struggling to deal with inflation and try to invest into something to beat inflation, the rich is borrowing free money and enrich themselves easily.

Thank you for confirming this ... guess HK is in the same situation as their peg is officia .. could be worse

http://www.hsbc.com.hk/1/2/hk/investments/mkt-info/deposit-rates/interest-rates

[Arcachon]

http://www.flixxy.com/uss-montana-silva-marine.htm

Let say Middle class is the "USS Montana" and US Fed fund rate is the "light house".

What would you suggest to the Middle class. Stay on course or change course.

[phantom_opera]

Australia, ECB, China, now South Korea .... Singapore already near ZERO ;)

S Korea unexpectedly cuts key interest rate

So China/South Korea/Australia all about 3%
ECB is ZERO
US is ZERO
SIBOR is 0.4
HK is slightly higher than SG only

[phantom_opera]

The US 15y rate is a dream for PC buyers in SG ... it simply shows how good HDB load @ 2.6% is

US Mortgage rates fell to new record lows, yet again, last week. The 30-year fixed rate hit 3.56% and the 15-year fell to 2.86%

[phantom_opera]

Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at the investment bank, says he expects the Federal Reserve to initiate an asset-purchasing program of as much as $500 billion in the second half of the year, which will drive spot gold much higher by the end of the year.
"We think that $2,000 an ounce is sort of the right number

=> if that is the case, 1500psf property should become 2000psf by year end :p

[phantom_opera]

DBS is betting that SIBOR stays below way 2% for next 5y :scared-4: :doh:

Year 1 2.25% = 2.25%
Year 2 2.25% = 2.25%
Year 3 2.25% = 2.25%
Year 4 2.25% = 2.25%
Year 5 2.25% = 2.25%

[phantom_opera]

The US treasury 10-year yield was at 1.4415 percent, after dropping as low as 1.4365 percent earlier in the Asian session. That was its lowest level since the early 1800's, according to data compiled by Reuters.

Will SGS 10y bond yield also drop to 1% soon?? :scared-1:

http://www.tradingeconomics.com/chart.png?s=masb10y&d1=19980101&d2=20120731

[Arcachon]

The US treasury 10-year yield was at 1.4415 percent, after dropping as low as 1.4365 percent earlier in the Asian session. That was its lowest level since the early 1800's, according to data compiled by Reuters.

Will SGS 10y bond yield also drop to 1% soon?? :scared-1:

http://www.tradingeconomics.com/chart.png?s=masb10y&d1=19980101&d2=20120731

Why not. US print money, Europe print money, China print money everyone is printing money.

[Laguna]

ya, the banks are now lending to me at 1.05% pa...as good as free money...

[phantom_opera]

Ironically, Spanish bond yield just broken record

SPANISH GOVERNMENT GENERIC BONDS - 10 YR NOTE
GSPG10YR:IND 7.56100% +4.05%
As of 03:57:00 ET on 07/23/2012.

Spanish Govt Generic Bonds 5 Yr Note
GSPG5YR:IND 7.30% +6.24%
As of 04:06:00 ET on 07/23/2012.

3 year:
GSPG3YR:IND 7.12% 0.58900 +9.01%

anything above 7% is not sustainable :hell-hath-no-fury:

[amk]

ya, the banks are now lending to me at 1.05% pa...as good as free money...

And they even can lend me unsecured ( from credit card !) at 1% !

This is unprecedented.

Years later ppl will need to study what happened today, in the history of economics.

[Arcachon]

And they even can lend me unsecured ( from credit card !) at 1% !

This is unprecedented.

Years later ppl will need to study what happened today, in the history of economics.

1% per month?

[phantom_opera]

Singapore’s 10-year bond yield declined 2.8 basis points to 1.294 percent.

[Laguna]

Singapore’s 10-year bond yield declined 2.8 basis points to 1.294 percent.

bond prices are moving up rather strongly lately with yield coming down.
This likely to stay for the next few months or till 2014

[phantom_opera]

(Reuters) - The euro jumped and European shares turned higher on Wednesday after a European Central Bank policymaker said there were reasons to boost the firepower of the euro zone's new bailout fund to tackle the region's deepening debt crisis.

Governing Council member Ewald Nowotny said there were arguments for giving Europe's permanent rescue fund a banking license which would allow it to borrow unlimited ECB money, an idea that the central bank has rejected so far.

=> Is this signal for printing?

[amk]

1% per month?

Per year.

To the original topic of this thread: today MAS MD came out and said everything is "adequate" right now. That means not only the peg stays, gradual appreciation of S$ also stays.

So low rate is going to be the defining phenomenon of this decade.

[phantom_opera]

Per year.

To the original topic of this thread: today MAS MD came out and said everything is "adequate" right now. That means not only the peg stays, gradual appreciation of S$ also stays.

So low rate is going to be the defining phenomenon of this decade.

10y of inaction = political suicide ??