China Will Fight to the End

On October 14, 2025, the Monetary Authority of Singapore (MAS) decided to maintain its exchange rate-based monetary policy, keeping the Singapore dollar nominal effective exchange rate (S$NEER) policy band’s slope, width, and midpoint unchanged. This decision, anticipated by 10 of 14 Reuters-polled analysts, follows two easings in January and April to address tariff concerns. Q3 GDP growth slowed to 2.9% year-on-year from 4.5% in Q2, yet “Singapore’s economic growth has turned out stronger than expected,” the MAS noted. The 1.3% quarter-on-quarter growth, slightly below Q2’s 1.5%, reflects resilience in manufacturing and consumer sectors, driven by global AI investments. Meanwhile, the Singapore 10-year government bond yield fell to a 3-year low of 1.74%, down 3.40 basis points over four weeks and 98.80 basis points over the past year, signaling easing rates despite the steady S$NEER policy. Unlike US 10-year Treasury yields, which held firm near 4.1% in Q1 2025 due to stagflation fears from tariff-driven inflation and slower growth, Singapore’s environment lacks such risks, with low inflation (0.6% in July 2025) and positive growth negating stagflation concerns.

The 1.74% 10-year yield reflects global and domestic dynamics distinct from the US’s earlier 2025 stagflation concerns. Global central bank easing, including the US Federal Reserve’s projected 50-75 basis point cuts in 2025, has lowered US Treasury yields to ~3.5%, pulling Singapore yields down due to market correlations. Ample domestic liquidity from earlier MAS easings fuels aggressive bidding for AAA-rated SGS bonds, while safe-haven demand surges amid tariff uncertainties, like delayed 100% US levies on pharmaceuticals affecting 13% of Singapore’s US exports. Low inflation (core at 0.5% for 2025) and a steepening yield curve further compress yields. This low-yield environment boosts housing affordability, with SORA-linked mortgage rates at 2.5-2.75% in early 2025, potentially dipping to 2% by year-end, spurring demand—private residential launches fell 8.35% in Q1 2025 but are rebounding. Cheaper loans encourage business and personal borrowing. However, rising spending lifts Certificate of Entitlement (COE) premiums, with October 2025 bids at $128,105 (Cat A) and $141,000 (Cat B), likely climbing despite a 16% quota hike in 2025.

The global economy remains “broadly resilient,” with US tariff implementations driving trade, but pharmaceutical tariffs threaten Singapore’s exports, with growth set to moderate in 2026 as “tariff effects start to bite.” Singapore is negotiating tariff exemptions, and some firms may benefit from US investments. Core inflation is projected at 0.5% in 2025 and 0.5-1.5% in 2026, with headline inflation at 0.5-1% this year and 0.5-1.5% next, keeping stagflation fears at bay. The MAS remains vigilant, stating, “MAS is in an appropriate position to respond effectively to any risk to medium-term price stability.” Savers face challenges: 6-month fixed deposits yield 2.20%, T-bills 1.59-2.20%, and SSBs 1.96% (10-year average) for October 2025, down from 2.11%, reflecting low SGS yields. The Ministry of Trade and Industry’s November forecasts will guide 2025 and 2026 expectations, with low yields favoring borrowers over savers.