Global Bonds Sentiment

[karlmarx]

Here's a question.

If SGD is a safe haven, why are our SGS bond yields, bank deposit rates, and equity dividend yields, higher than many other (less safe) markets?

[Temperament]

We can't be like them even if we want to. We are just a tiny red dot with nothing but human resources and reputation.

[dreamybear]

We are just a tiny red dot with nothing but human resources and reputation.

Very good concise way of putting it. Sometimes I wonder if we thought too highly of our own country. If we were to go to CNBC and click "Asia", STI is not even listed, only Nikkei, Shanghai, HSI, ASX, Kospi. With the recent turmoil, more HKers are beginning to realize the vulnerability of a small country. As the saying "Dreams are not reality" goes, we need to keep abreast of global developments which I find many fellow S'poreans whom I know don't really bother(though some are genuinely due to lack of time). Ignorance may be bliss but I think nobody wld want to be left without a chair when the music stops.

Speaking of human resource, it is ironical that while the govt emphasizes it, our local unversity degrees are of little value despite our universities being ranked highly globally, and not to mention that a lot of effort & resources(think tuition, etc) need to be expended in order to qualify. To put in investing terms, my ROE(Return on Effort) wld be much higher if I were a UK or US citizen. With the same amount of self-torture effort, sacrifice and determination, I wld have graduated in Cambridge, Oxford or Harvard, instead of the worthless mediocre NUS(Hons).

Oh yes, I also wonder why our govt cannot issue bonds at lower rates(is it really a lack of demand?) because that wld help the nation's coffers.

[pencilin]

We are just a tiny red dot with nothing but human resources and reputation.

Temperament:
We are just a tiny red dot with -- a superb Natural Resource called deep water port, that rakes in multi-Billions annually through (1) transhipment fees (2) bunkering (3) transit fees
nothing but human resources and reputation, -- if & only if it's replaced by China's OBOR partnership with regional countries.

[pencilin]

We are just a tiny red dot with nothing but human resources and reputation.

Very good concise way of putting it. Sometimes I wonder if we thought too highly of our own country. If we were to go to CNBC and click "Asia", STI is not even listed, only Nikkei, Shanghai, HSI, ASX, Kospi. With the recent turmoil, more HKers are beginning to realize the vulnerability of a small country. As the saying "Dreams are not reality" goes, we need to keep abreast of global developments which I find many fellow S'poreans whom I know don't really bother(though some are genuinely due to lack of time). Ignorance may be bliss but I think nobody wld want to be left without a chair when the music stops.

Speaking of human resource, it is ironical that while the govt emphasizes it, our local unversity degrees are of little value despite our universities being ranked highly globally, and not to mention that a lot of effort & resources(think tuition, etc) need to be expended in order to qualify. To put in investing terms, my ROE(Return on Effort) wld be much higher if I were a UK or US citizen. With the same amount of self-torture effort, sacrifice and determination, I wld have graduated in Cambridge, Oxford or Harvard, instead of the worthless mediocre  NUS(Hons).

Oh yes, I also wonder why our govt cannot issue bonds at lower rates(is it really a lack of demand?) because that wld help the nation's coffers.

Dreamy:
Singapore is NOT important in world stage. The population is too small and it's not worth for any business to pay attention.
It is successful because Asean is closed and MNC need a foothold to those Massive market.

NUS & NTU are very well Marketed to Asean parents. In hope of attracting some talents, and hopefully they buy those "overpriced" properties as well. Those talents can be sold to MNC and property $ is a good revenue source.
But in terms of quality of education, local uni are over-rated. That's why you see none of the ministers send their kids there.

Why don't they support local uni, when they claim it's one of the top in the world? making Oxford and Cambridge looks like a joke

[gzbkel]

Like to ask VB's opinion about buy 10 year US treasuries at this point in time (About 4.4% yield)

I understand that buying long dated bonds is akin to speculating on interest rates, since you will get unrealized losses if rates go higher.

My reasons:
- Personally I try to keep a 50:50 bond to equity ratio, and so far my "bond component" has been mainly 6-month SG T-bills. The problem with T-bills is that you don't get capital gains in the event of a interest rate drop. Role of bond component is to get capital gains in the event of recession, leading to higher bond prices due to lower rates, thus offsetting losses in your equity component. So I want to move some of my t-bills to longer dated treasuries.

- US 10 year bonds has better liquidity than SG 10 year bonds. This is important if I want to rebalance in the event of a recession causing equity sell-off and bond price increase. There is of course forex risk.

- US 10 year bond liquidity seems good enough that I don't see a need for a ETF that charges annual expense. And default possibility should be near zero for sovereign bond, so there should be no need for diversification.

- My gut feeling is that inflation rate is unlikely to be more than 4% for the long term. I am prepared to hold for the full 10 years if necessary to get back my capital. I could be wrong, but risk reward doesn't seem bad at current yield.

Are there any holes in my reasoning?

[CY09]

Hi gzbkel, rather sound. 10 yr treasury US bonds are indeed attractive for Sg consumers. Furthermore, T bills you run the risk of not full allocation and have to incur a service fee for every cycle of renewal + pockets of period where there is no interest accurred as you are waiting for the next tranche.

All in all, I do feel 10 yr treasury US bond is a decent enough to form a bond portfolio

[money]

Like to ask VB's opinion about buy 10 year US treasuries at this point in time (About 4.4% yield)

I understand that buying long dated bonds is akin to speculating on interest rates, since you will get unrealized losses if rates go higher.

My reasons:
- Personally I try to keep a 50:50 bond to equity ratio, and so far my "bond component" has been mainly 6-month SG T-bills. The problem with T-bills is that you don't get capital gains in the event of a interest rate drop. Role of bond component is to get capital gains in the event of recession, leading to higher bond prices due to lower rates, thus offsetting losses in your equity component. So I want to move some of my t-bills to longer dated treasuries.

- US 10 year bonds has better liquidity than SG 10 year bonds. This is important if I want to rebalance in the event of a recession causing equity sell-off and bond price increase. There is of course forex risk.

- US 10 year bond liquidity seems good enough that I don't see a need for a ETF that charges annual expense. And default possibility should be near zero for sovereign bond, so there should be no need for diversification.

- My gut feeling is that inflation rate is unlikely to be more than 4% for the long term. I am prepared to hold for the full 10 years if necessary to get back my capital. I could be wrong, but risk reward doesn't seem bad at current yield.

Are there any holes in my reasoning?

If i have the intention to hold for 10 years, i would rather buy berkshire hathaway at today's price. The 4.4% yield of the 10 year bond, after paying taxes, i believe works out to be about 3 point something yield. Overall little upside, a lot of downside

[gzbkel]

Like to ask VB's opinion about buy 10 year US treasuries at this point in time (About 4.4% yield)

I understand that buying long dated bonds is akin to speculating on interest rates, since you will get unrealized losses if rates go higher.

My reasons:
- Personally I try to keep a 50:50 bond to equity ratio, and so far my "bond component" has been mainly 6-month SG T-bills. The problem with T-bills is that you don't get capital gains in the event of a interest rate drop. Role of bond component is to get capital gains in the event of recession, leading to higher bond prices due to lower rates, thus offsetting losses in your equity component. So I want to move some of my t-bills to longer dated treasuries.

- US 10 year bonds has better liquidity than SG 10 year bonds. This is important if I want to rebalance in the event of a recession causing equity sell-off and bond price increase. There is of course forex risk.

- US 10 year bond liquidity seems good enough that I don't see a need for a ETF that charges annual expense. And default possibility should be near zero for sovereign bond, so there should be no need for diversification.

- My gut feeling is that inflation rate is unlikely to be more than 4% for the long term. I am prepared to hold for the full 10 years if necessary to get back my capital. I could be wrong, but risk reward doesn't seem bad at current yield.

Are there any holes in my reasoning?

If i have the intention to hold for 10 years, i would rather buy berkshire hathaway at today's price. The 4.4% yield of the 10 year bond, after paying taxes, i believe works out to be about 3 point something yield. Overall little upside, a lot of downside

Hi money. My policy is to hold some bonds in my portfolio. I do not do 100% equity allocation.
So my question is more about the merits of buying us 10 year Treasuries vs other types of bonds.

I do not think there is any tax on us treasuries interest income.

Can you elaborate more on the downsides you see?

[pianist]

How do U trade to buy a us treasury bond, and the trading fee?
Forex risk is one to look out for
If at 4.4% net yield, why not consider the recent bond offer of SGD denominated 4.275% 10 years issued by Manulife FC (callable at the 5th years), no tax deductible