Singapore Bonds Decline as 10-Year Yields Climb to 22-Month High

Singapore bonds slumped, pushing 10-year yields to a 22-month high, after better-than-forecast U.S. jobs growth kept alive speculation the Federal Reserve will cut back on monetary stimulus.

The price of Singapore’s 3.125 percent note due in September 2022 tumbled to S$110.42 as of 2:41 p.m. local time from S$110.98 June 7, based on data compiled by Bloomberg and supplied by the Monetary Authority of Singapore. The yield rose six basis points, or 0.06 percentage point, to 1.89 percent. It was the highest level since Aug. 2, 2011, based on the MAS data.

Yields on 10-year U.S. Treasuries have advanced for six weeks, the longest stretch in four years. They climbed 10 basis points on June 7 as the Labor Department reported U.S payrolls swelled by 175,000 in May. The median forecast in a Bloomberg News survey was for 163,000. The unemployment rate rose to 7.6 percent from 7.5 percent.

“Singapore bonds slavishly track Treasury yield movements, which is responsible for what’s happening today,” said Tim Condon, the head of Asia research at ING Groep NV in Singapore. “The end-game is considerably higher 10-year Treasury note yields, and Friday’s numbers reinforce that this is happening.”

Treasury 10-year yields may climb to 2.50 percent in 2015 from 2.16 percent today, Condon said.

“If the 10-year yield in the U.S. is going up by about 30 basis points, then it’ll be 20 basis points on the Singapore 10-year,” Condon said.

The Singapore dollar fell 0.7 percent to S$1.2580, headed for a second straight loss.

U.S. central bank policy makers led by Chairman Ben S. Bernanke will probably trim their so-called quantitative easing program to $65 billion a month at the Oct. 29-30 meeting of the Federal Open Market Committee, from the current level of $85 billion, according to the median estimate in the survey of 59 economists last week.

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