SGS vs US Treasury yield gap: does it explain USD/SGD?
Singapore's 10-year yield was 240 basis points below the US 10-year at the end of August 2026, yet the Singapore dollar was near its strongest level in years at 1.28 per US dollar. Since 2016 a wider gap has gone with a stronger Singapore dollar, the opposite of the textbook.
Textbook logic says money flows to the currency with higher interest rates. Singapore has offered lower long-term yields than the United States for most of the past 28 years, and the Singapore dollar has still strengthened. This note sets the yield gap against USD/SGD and shows where the textbook fails.
How large is the gap now?
At the end of August 2026 the 10-year SGS yield was 2.35% (MAS via SingStat) and the US 10-year Treasury yield was 4.75% (FRED DGS10), both month-end values.
10-year SGS yield minus 10-year US Treasury yield, end of August 2026 (month-end values)
US yields kept rising in September. Using daily closes for 30 September, 2.47% from ADB AsianBondsOnline (data: Bloomberg) against 5.29% from FRED, the gap was about −282 basis points. The two figures come from different sources and are not a continuation of the official series.
When was Singapore below or above the US?
Singapore’s 10-year yield was below the US yield in 287 of 339 months from June 1998 to August 2026.
| Stretch below the US | Length | Most negative |
|---|---|---|
| October 1998 to October 2014 | 193 months | −220 bp |
| January 2017 to May 2019 | 29 months | −66 bp |
| July 2022 to August 2026 (continuing) | 50 months | −242 bp (May 2026) |
Singapore was at or above the US mainly from November 2014 to the end of 2016, and in scattered months between mid-2019 and mid-2022. The highest reading was +81 basis points in September 1998, during the Asian financial crisis.
Does the gap line up with USD/SGD?
Only weakly, and since 2016 in the opposite direction from the textbook. The exchange rate below is Singapore dollars per US dollar, monthly average, so a lower number means a stronger Singapore dollar.
| Measure | Value |
|---|---|
| Correlation of gap and USD/SGD level, 1998 to 2026 | −0.37 |
| Same, 2016 to 2026 | +0.72 |
| Correlation of 12-month changes | 0.12 |
| Average USD/SGD when the gap was negative | 1.4728 |
| Average USD/SGD when the gap was zero or positive | 1.3846 |
The full-sample figure suggests a lower relative yield went with a weaker Singapore dollar, but that mostly reflects one era: the long negative stretch from 1998 to 2014 started when the currency was much weaker. Since 2016, months with a wider negative gap have tended to show a stronger Singapore dollar. And when the gap changed over a year, the exchange rate barely moved with it.
How did the gap and the exchange rate move in 2026?
How did the gap and the exchange rate move in 2026?
10-year gap vs US
Shared linear scale from zero. Negative values extend left. Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Month | 10-year gap vs US | USD/SGD (monthly average) |
|---|---|---|
| December 2025 | −196 bp | 1.2907 |
| January 2026 | −219 bp | 1.2797 |
| February 2026 | −202 bp | 1.2664 |
| March 2026 | −201 bp | 1.2796 |
| April 2026 | −230 bp | 1.2759 |
| May 2026 | −242 bp | 1.2748 |
| June 2026 | −240 bp | 1.2878 |
| July 2026 | −240 bp | 1.2908 |
| August 2026 | −240 bp | 1.2763 |
Singapore dollars per US dollar, August 2026 monthly average, while the yield gap stood at −240 basis points
The gap widened by 44 basis points between December and August, and the Singapore dollar ended slightly stronger, 1.1% fewer Singapore dollars per US dollar. The exchange rate moved within a narrow range all year.
Why does the textbook not fit Singapore, and when might the gap matter more?
MAS does not set an interest rate. It manages the Singapore dollar against a basket of trading-partner currencies, letting it appreciate along a policy band. In July 2026 it raised that rate of appreciation very slightly. One common reading is that investors accept a lower SGS yield because they expect the currency to gain over time, so the yield gap and the expected currency path offset each other. This is an interpretation, not something the correlation proves.
The gap could matter more in three situations: if MAS flattened the band’s slope, removing the expected appreciation; if a global risk-off episode pulled money out of Asian assets regardless of rates; or if export demand turned. On the last point, exports have been supportive for now: electronics non-oil domestic exports rose 131.8% year on year in August 2026.
To compare an amount across years in Singapore dollars and US dollar terms, use the past money calculator.
Open the past money calculator →
What are the limits?
The Singapore yield is an end-of-month value and the US yield is the matching FRED month-end value; the exchange rate is a monthly average. The September gap mixes ADB (data: Bloomberg) and FRED daily closes. Correlations depend heavily on the period chosen and describe co-movement, not cause and effect.
Questions & answers
How far is the Singapore 10-year yield below the US 10-year?
240 basis points at the end of August 2026 (2.35% against 4.75%, month-end values from MAS via SingStat and FRED DGS10). At the end of September the gap was about 282 basis points (2.47% from ADB AsianBondsOnline, data: Bloomberg, against 5.29%). The most negative month-end in the official series was −242 basis points in May 2026.
If Singapore yields are lower, why is the Singapore dollar strong?
MAS sets monetary policy through a trade-weighted exchange rate band and has kept it on an appreciating path, raising the rate of appreciation very slightly in July 2026. Investors who expect the Singapore dollar to rise accept a lower interest rate. Since 2016 the correlation between the gap and USD/SGD has been +0.72, meaning a wider negative gap went with a stronger Singapore dollar.
Does the yield gap predict USD/SGD?
Not well. Over 1998 to 2026 the level correlation is −0.37, and the correlation between twelve-month changes in the gap and in the exchange rate is 0.12, close to zero. These are descriptions of the past, not forecasts.
Source
- SingStat Table Builder M700071 - Government securities 10-year bond yield, end of period (source: MAS) ↗
- FRED - Market yield on US Treasury securities at 10-year constant maturity (DGS10) ↗
- FRED - Singapore dollars to one US dollar (DEXSIUS) ↗
- ADB AsianBondsOnline (data: Bloomberg) - 10-year local currency government bond yields ↗
- MAS - Monetary Policy Statement, 27 July 2026 (via Mondo Visione) ↗
- TechNode Global - Singapore exports surge 46.2% in August (17 September 2026) ↗
- CapsWindow - Data & methodology ↗