EM Alpha: Singapore – Close SORA flattener

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EM Alpha: Singapore – Close SORA flattener

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EM Alpha

Singapore – Close SORA flattener

Close SGD SORA front-end flattener 25 June 2026

We close our recommendation for SGD SORA swaps flattener (using 3m forward 1s5s GEM FI & FX Strategy

curve) (entry 3m forward 1s5s 55bps, current 45bps, spot reference 50bps, target Emerging Markets Global

30bps, stop 70bps, carry/roll -1.4bps/m). While the curve has flattened over time, the

extent of flattening has been limited and only marginally outpaced the forward curve Abhay Gupta

pricing at that time (which indicated negative carry of holding the trade). Emerging Asia FI/FX Strategist Merrill Lynch (Singapore)

+65 6678 0427

We entered the trade earlier this year on expectations of hawkish policy bias leading to abhay.gupta2@bofa.com

tighter financial conditions (See report EM Alpha: Singapore: Position for MAS April hike. Claudio Piron

SGD SORA flattener 07 January 2026). We expected both FX and rates to share the EmergingMerrill LynchAsia(Singapore)FI/FX Strategist

burden of tightening, given low level of front-end rates initially compared to either US claudio.piron@bofa.com

rates or SNEER basket rates. That had kept short SNEER carry too elevated which would Kai Wei Ang

have put downward pressure on SNEER. That makes it difficult to achieve tightening of ASEANMerrill LynchEconomist(Singapore)

financial conditions only via FX without heavier management or guidance of SNEER by kaiwei.ang@bofa.com

policy makers.

However, MAS bias turned out to be less hawkish than we expected at that time. For a complete list of our open trade

Secondly, rise of global uncertainty in March led to the usual policy reaction by keeping recommendations, as well as our

liquidity conditions flush and pushing fixing lower.