Looks like MAS had 2 busy months preparing their response to the 50 years loan incident which probably caught them by surprise. Now housing loans are effectively limited to a maximum of 30 years where it had been predominantly 35 years before.
The recent weeks have been some of the most volatile ones as the fear of the European financial crisis ripples through the economies of the world, resulting in a massive flight to safety to the USD and funds being drawn out of troubled countries, pushing up the USD and triggering bank runs. The rise in the USD depressed commodity prices, including that of gold, though as at the time of writing this, gold just shot up about US$50 (3%) on news of US jobs data being weaker than expected, thus sparking speculation of possible monetary easing to come. So it seems gold is seen as a safe haven again relative to the USD.
SOR rises above 0.5% for the first time since June 2010, as the USD/SGD moves close to 1.3 again and LIBOR hit 0.54% on its continued steep incline, while SIBOR remains muted at 0.38%. The massive flight-to-safety from the Eurozone’s trouble pushes the US dollar higher as investors piled into Treasuries. This, the result of ECB’s stubborn unwillingness to print money, though, as widely expected, they did further cut rates by another quarter points to 1%.
Even as stimulus packages were announced for the US and much of Europe, the idea seems to be hinted at for Singapore as news of economic turmoil start to trickle in. Around the region, the Philippines has announced its plans for a stimulus package, and Indonesia has it in the works also, almost in a chorus.
Oil hit aboove US$94 per barrel today. For some time, it hovered around US$88 and refused to go down. USD/CAD went below parity (didn’t hold though) for the first time since Sep 21. SOR rose from under 0.2% to almost 0.35% in a little over a week, even as USD/SGD fell from 1.3 to 1.26 in just over 2 weeks. As mentioned in a previous posting, SOR and SIBOR were expected to be going up. SOR is probably tracking the climb in LIBOR, which increased quite significantly in the past 3 months. Treasury yields have been on an uptrend as well.
The documentary that won an Oscar. The very country that plunged the world into recession is the same amazing country that allows such a film to be made and screened. This is Reality TV at its best, featuring a truly stellar cast of real politicians, Wall Street executives and other characters of international fame.
World’s End Close, Edinburgh
The events in the past week may be telling us that we could be one step closer to the end of the world. Ok, that’s a bit of an exaggeration, but these were significant events. US just lost its AAA rating for the first time. That means a loss of confidence in the US in their ability to repay their debt, and more so, a loss of confidence in the governance of the country. This has major repercussions on the financial system, especially the currency.
QE3
Probably by now, the term Quantitative Easing (QE) is familiar to most people, having been widely publicized in the media. It is the “tool” employed by a central bank to revive the economy, by printing money.The aim is to get money flowing and thereby get the economy going. QE also keeps interest rates low as banks are flooded with money to be loaned out.
Sibor and SOR rates seem to be consolidating and staying low this week, both (3-month rates) maintaining below 0.9% consecutively for the last 3 days. There is perhaps a lack of driver, with Libor rates (3m USD) hovering around 2.15% – 2.30% and USD/SGD exchange rates holding at 1.53 for now. News of impending Fed Funds Rate cut, possibly to 0.5%, might just help to keep Sibor and SOR below 1% for the months ahead.
Looks like it started to hit home in a big way – DBS cuts 900 jobs. Earlier on Chartered Semiconductor implemented temporary salary reductions of 5-20 percent.