What is your projection of the sibor rates for the next 5 years. And why?
Newbie
What is your projection of the sibor rates for the next 5 years. And why?
Newbie
+0.25% for the first few times due to FED's conservative stance. By end of 2016, we should be seeing close to 2%. Should reach at least 3% in 2018. By 2020 it should be close to 5%.
US unemployment is all time low now and real inflation rate is building up. Not sure if we should be happy or worry.
Cos for a $1m loan, the monthly installment will more than double if interest rates move to 5%.
Last edited by pmet; 03-10-14 at 20:47.
Senior
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have – or don’t have – in their portfolio.”
4. We can’t put all false predictors in jail.
“I find it profoundly unethical to talk without doing, without exposure to harm, without having one’s skin in the game, without having something at risk.”
We all like to listen to the so-called experts making predictions about the property market – the media love it; the audience love it. These ‘experts’ and their predictions are fragile because they are exposed to prediction errors. Honestly, who can tell what is going to happen in the future?
Below are the media predictions and the reality of the property market in the 2000s and 1990s, extracted from No B.S. Guide to Property Investment.
predictions
But they don’t have to pay a price for their mistakes. In fact, in our history no one has ever been convicted by law because their projection figures or forecast trends are far from reality. No one has ever paid a price for a prediction error.
We can’t stop people from asking for predictions. We can’t stop experts from making false predictions. But we can at least request the predictors to eat their own cooking and have their skin in the game.
“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have – or don’t have – in their portfolio.”
http://propertysoul.com/
Junior
Great and Rupiah interest rate would be 20% at least.Originally Posted by pmet
Global recession is coming....
5%? That is the "old norm" lah!
The Fed already said : They target only 3.5% in next few years!
Newbie
...and thus killing their own economy as a result? Indo sets their own interest rates and I don't think they will shoot themselves in the foot. What was Indo's rates in 2005?
Newbie
Nah! FED uses what they call "forward guidance" which changes as economy changes. The estimate of 3.5% is based on 4% growth rate in the last quarter. It should get better (and higher) unless another Leman...
Junior
if what u say turn true, we might need many world banks to bail out US treasury.....
Newbie
You forgot the FED printed 4 trillion USD? Think they could use some creative accounting there!if what u say turn true, we might need many world banks to bail out US treasury.....
Global recession is coming....
Based on what you said, I would dump all bonds, T-bills, all REITs etc now! Bonds and REITs and T-bills will suffer heavily!!!!!!!!!!!!!!
US Govt will also need to pay huge interests through their noses because they still need money to run due to budget deficit by issuing T-bills!!!!!!!!!!!!!!!
The last time I heard, 3.75% is Fed's new norm or new long-term equilibrium rate to avoid paying historical norm of 5.5% interest!
See below for Feds guidance:
"The new Fed forecasts suggest that at the end of 2016 the U.S. economy will be at full employment, with inflation slightly below 2%. Despite that robust outlook, the Fed's projected median fed funds rate for the end of 2016 is just 2.85%, nearly 1% below its stated long-run equilibrium rate of 3.75%. Fed Chair Janet Yellen attributed this to the "lingering effects" of the global financial crisis."
Last edited by teddybear; 04-10-14 at 01:19.
Junior
Just follow DBS... they know what they are doing...
Global recession is coming....
Is DBS the bank last year (or early this year?) that offered 1.88% fixed rate for 10 years?
Junior
They offered 10years rate below 2.6% for HDB loan...
1.88% is for private for 5 years if im not mistaken. ..
They must know something we dont.
Junior
Think i will go floating at least for the next 5 years...
Global recession is coming....
My understanding is that they are confident that:
1) SIBOR+1% will not exceed 1.88% within 5 years or until 2019...........
2) SIBOR+1% will not exceed 2.50% within 10 years or until 2024..........
SIBOR is set by numerous participating banks, of which DBS is 1 of them! Obviously they will know SIBOR rate trend and direction and estimated quantum in the future much better than we do!
Given that now we know that Fed's long-run (long-term norm) equilibrium rate is 3.75% now (and the old norm was 5.5%), we can expect similar "haircut" to long-run SIBOR rate now vs many years ago!
Newbie
That's a good reference. Since banks not be so stupid to make a loss.
What do you mean by haircut to long run sibor rate?
Global recession is coming....
"haircut" is a term MAS like to use, as can be seen in their TDSR directives on how to compute TDSR, like your foreign currency and assets' values needs a haircut of 70% when computing your TDSR (vs only 30% haircut of your S$ currency and assets' values)........
I must say, they are dead wrong in their directives!
Going forward, foreign currency and assets like US$ and US stocks are going appreciate much faster and higher than S$ currency and assets! They should mandate haircut of 70% to S$ currency and assets' values and 30% for US$ and US stocks instead!
Senior
Smart investors have already started going into US market several months ago. Emerging market is slowly and funds have started moving back to US, with a slow down in China's economy."haircut" is a term MAS like to use, as can be seen in their TDSR directives on how to compute TDSR, like your foreign currency and assets' values needs a haircut of 70% when computing your TDSR (vs only 30% haircut of your S$ currency and assets' values)........
I must say, they are dead wrong in their directives!
Going forward, foreign currency and assets like US$ and US stocks are going appreciate much faster and higher than S$ currency and assets! They should mandate haircut of 70% to S$ currency and assets' values and 30% for US$ and US stocks instead!
Global recession is coming....
That is even more strange given that MAS mandated that S$ currency and assets MUST have higher valuation than US$ currency and assets!
Anyway, the trend of US$ appreciating against S$ has started, and this trend will likely continue for a few years!
For those people whom their world is only S$ cash and S$ assets, they should go out and see the big wide world, and beware of OCR private properties!
Senior
Wait and see, don't be misled, by US$ appreciating against S$. I don't think a few years a few month you will see S$ appreciating US$ otherwise Jim Roger don't have to move from New York to Singapore.That is even more strange given that MAS mandated that S$ currency and assets MUST have higher valuation than US$ currency and assets!
Anyway, the trend of US$ appreciating against S$ has started, and this trend will likely continue for a few years!
For those people whom their world is only S$ cash and S$ assets, they should go out and see the big wide world, and beware of OCR private properties!
Last edited by Arcachon; 06-10-14 at 23:30.
Global recession is coming....
Let's wait and see............... I am confident that US$ will be higher than S$ 1 year later from now, and will still be higher 2 years later.................. Let put on record that now US$1 is US$1.278.
And not to pour cold water, if you have invested in soft commodities like what someone strongly urged you to, don't think you are in good position..............
Senior
Only know property, brought share and the next thing you know the share market crash.
Newbie
I've said that the FED uses forward guidance so regardless of what they say now, the interest rates in 5yrs time won't be 3.75%. You have to see the acceleration of the US economy to get ahead of the curve which the FED always fail to do so. What's more, the upcoming US presidential election could also throw the FED into doldrums if conservative Republicans are elected. All-in-all, there are alot of variables ahead and if you're an investor, you would not use short-sighted references like the 3.75% in your decision to buy or sell an investment. My take is still 5% or more in 5yrs from now.
On a sidetrack, I so agree with you that USD and US denominated assets will appreciate from this point. SGD and SGD denomicated assets have past its golden years.
Newbie
DBS knows something we don't, and maybe Bill Gross knows something we don't too. My advise is, don't copycat lah!
http://www.cnbc.com/id/102036062
The sudden exit of Bill Gross from Pimco sparked a knee-jerk selloff in the Treasury market, a drop in Pimco closed-end funds and rallies in competitors' shares as traders gamed whether the world's largest bond house would see an exodus of investors and a repositioning in its funds.
He will be succeeded by Daniel Ivascyn, the company announced later on Friday.
Treasury yields moved higher, with the 10-year going from about 2.50 to 2.54 percent, before retreating back to 2.52 in midmorning trading.
Read MoreBill Gross jumps to Janus
Gross, who ran the Pimco Total Return Fund, the largest bond fund, announced his immediate departure for Janus Capital Management where he will manage the Janus Global Unconstrained Bond Fund (JUCAX) and will be responsible for building out the firm's global macro fixed income strategies. Janus stock surged 36 percent, and rival BlackRock jumped 3 percent.
Bill Gross
Andrew Harrer | Bloomberg | Getty Images
Bill Gross
"I don't believe the fundamental news should be negative for Treasurys but people are talking about it," said Ian lyngen, senior strategist at CRT Capital. "The logic goes like this. Gross is bullish. He's leaving Pimco. Pimco is a big holder of securities, so that could likely lead to selling. Gross has a cult of personality. Pimco could lose assets. Do they go to Janus? Unclear."
The Pimco Total Return ETF fell slightly, but Pimco closed-end funds were hit hard. Pimco Corporate and Income Opportunity Fund dropped 5 percent, Pimco Global StocksPLUS and Income Fund fell more than 7 percent and Pimco High Income Fund fell more than 6 percent.
"It could account for worse-than-expected performance in high yield, and maybe a few basis points in bonds," said Adrian Miller, director of fixed income strategy at GMP Securities. There was some speculation that Pimco was the big player selling high-yield securities this week, ahead of Gross' departure.
A spokesman at Allianz, Pimco's parent company, declined to comment on Gross outside of a brief statement confirming the move. Its shares were weaker. Gross joins Richard Weil, CEO at Janus, a former colleague who left Pimco in 2010. Gross, 70, founded Pacific Investment Management Co. in 1971.
He built Pimco into a $2 trillion bond house, but the firm has suffered recently as investors pulled more than $64 billion from the Total Return fund since May 2013. The $222 billion fund is the largest bond mutual fund in the world.
The Wall Street Journal reported Pimco was about to fire Gross before he resigned, according to sources. The newspaper earlier in the week reported the Securities and Exchange Commission is investigating the Total Return ETF run by Gross for artificially boosting returns.
In terms of assets, Pimco dwarfs Janus, which has $177.7 billion under management.
Senior
Introduction to Singapore Government Securities (SGS)
Singapore Government Securities (SGS) were initially issued to meet banks' needs for a risk-free asset in their liquid asset portfolios. In 1998, MAS spearheaded efforts to enhance the efficiency and liquidity of the SGS market as part of its strategy to develop Singapore as an international debt hub. This was further refined in May 2000 with the introduction of a focused issuance programme aimed at building large and liquid benchmark bonds, primarily through larger issuance of new SGS bonds and re-openings of existing issues to enlarge the free float and occasional bond purchase programmes to re-channel liquidity from off-the-run issues to benchmark bonds. Since then, the SGS market has grown significantly, making it one of the fastest developing bond markets in Asia.
Unlike many other countries, the Singapore Government does not need to finance its expenditures through the issuance of government bonds as it operates a balanced budget policy and often enjoys budget surpluses. This allows the government to focus on the development of Singapore’s capital markets instead, and the issuance of SGS serves primarily to:
i. build a liquid SGS market to provide a robust government yield curve for the pricing of private debt securities;
ii. foster the growth of an active secondary market, both for cash transactions and derivatives, to enable efficient risk management; and
iii. encourage issuers and investors, both domestic and international, to participate in the Singapore bond market.
As the fiscal agent of the Singapore Government, MAS is empowered by the Development Loan Act and the Government Securities Act to undertake the issue and management of securities on behalf of the Government.
The amount of SGS issued is authorised by a resolution of Parliament and with the President's concurrence. Each year, MAS seeks approval from the Minister for Finance for the total SGS issuance amount for the new financial year. MAS decides, in consultation with the SGS primary dealers, the timing and amount of individual bond issues.
Global recession is coming....
This is what I see from new: "Fed ... stated long-run equilibrium rate of 3.75%"...
"long-run equilibrium" is short term to you? How "short" is your "short-term"?
"The new Fed forecasts suggest that at the end of 2016 the U.S. economy will be at full employment, with inflation slightly below 2%. Despite that robust outlook, the Fed's projected median fed funds rate for the end of 2016 is just 2.85%, nearly 1% below its stated long-run equilibrium rate of 3.75%. Fed Chair Janet Yellen attributed this to the "lingering effects" of the global financial crisis."
Senior
Lots of people got short term memory, the US$ will go up, interest will go up but when they start to remember how much debt US have all will start coming down.
They are proud to be in Debt. Debt equal Money, No debt no money.
http://www.usdebtclock.org/
Newbie
Read my previous post. I've mentioned that you need to treat the FED's long term and short term rates as forward guidance which can change if economic or political climate changes: http://www.cnbc.com/id/102050278
3.75% is by no means goal post.
So far, the FED has proven to be behind the curve so go figure yourself.
Global recession is coming....
It is a joke when people say "the FED has proven to be behind the curve" ha ha ha!
The Fed they themselves set the Fed fund rate, why would they care when people say they are "behind the curve"? Those people just because the Fed didn't do what they advocated?
Newbie
If the FED is behind the curve, do you still think you can trust their forecast? In the same way, if a weather man who's always behind the curve can only tell you yesterday's weather forecast, so are you still going out without an umbrella today? This discussion is getting way longer than it's worth. Just agree or disagree and call it a day.It is a joke when people say "the FED has proven to be behind the curve" ha ha ha!
The Fed they themselves set the Fed fund rate, why would they care when people say they are "behind the curve"? Those people just because the Fed didn't do what they advocated?
And everyone knows MBT was behind the curve too.
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