Interest Rates Analytics
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.
Breakdown of drivers for USD, SGD and HKD interest rates.
Latest update: 1 July 2024
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.
USD Rates
Cooling inflation expectations amidst a more balanced labor market data opens room for Fed cuts in 3Q, driving down USD Rates in the process.
SGD Rates
Factors impacting SGD Rates have been largely stable. Short term SGD Rates would head down once the Fed cuts later this year.
HKD Rates
The strengthening HKD has kept further upside in HKD rates at bay. Meanwhile, liquidity conditions are set to ease amid the fading demand for HKD from quarter-end effects and stock market rebound.
EM Rates Valuation Indicator (ERVI)
Latest update: 1 July 2024
How to interpret ERVI values
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. 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
Current Valuations
Upcoming Fed easing should allow EM currencies and rates to take a breather. Within Asia, we continue to favour shorter-dated CNY govvies. The build-up of PBOC rate cut expectation will drive CGB yields lower.
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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.
