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: 22 November 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
10Y UST yields are drifting higher as markets are scaling back rate cut expectation. Stronger growth and inflation expectations are building up under the new administration. Term premiums remain elevated as larger fiscal deficits are priced in.
SGD Rates
Worries about the Fed being less dovish are driving Singapore government bond yields and SORA OIS rates higher.
HKD Rates
Coupled with rising USD rates, tight liquidity is supporting the upward trend in HKD rates.
EM Rates Valuation Indicator (ERVI)
Latest update: 28 October 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. A Positive value 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
Emerging market currencies and rates are taking a hit from a stronger USD and higher USD rates. Within Asia, we continue to favour CGBs and IGBs. Expectations of PBOC rate cuts are driving CGB yields lower, while portfolio inflows into IGBs and FDI are keeping IGB yields in check.
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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.
