SINGAPORE (July 10): A further pickup in Singapore’s fundamentals and market activity remains tied to the upcoming actions of the US Federal Reserve in 2H17 and the resultant flow-on effect of SGD rates, says OCBC Bank.

In its Singapore Mid-Year 2017 Credit Outlook report issued on Saturday, OCBC’s Asia credit research team notes that the city state’s credit outlook for the second half the year is somewhat mixed as 1H17 was technical-driven, which means an unwinding could be on the cards.

The bank also highlights the potential tapering of the Fed’s balance sheet could hurt asset prices and thus, lower the odds of an additional rate hike of 2017 – adding to the uncertainty in the rates outlook given diverging views at the Fed on the timing of policy normalisation.

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