Singapore government bonds beat their biggest developed market peers last month as a flare-up in coronavirus infections in the city state fostered demand for haven assets.
The securities gained 1 per cent last month, a performance that trails only that of South African and Mexican notes among 30 of the world's largest debt markets, according to data compiled by Bloomberg.
Fifteen-and 20-year bonds outperformed other tenors.
Singapore was forced to reimpose a month of lockdown-like conditions from May 16 to quell a rising number of infections, its first return to tightening restrictions since last year. The Republic's bonds also caught a bid from subdued inflation and a lack of supply pressures.
"The implicit increase in household savings from restrained activity has been beneficial for longer-tenor bonds and supporting their relative outperformance," said Mr Philip McNicholas, Asean foreign-exchange and rates strategist at Bloomberg Intelligence.
"A general normalisation in the United States' post-reopening economic activity could give further tailwind to Singapore dollar bonds as (Federal Reserve) tightening gets pushed back."
Infections in the city state have since stabilised. Singapore Prime Minister Lee Hsien Loong said on Monday that restrictions may be eased in two weeks.
The lack of price pressures is another boon for bonds. Economists estimate that Singapore's consumer prices will rise just 1.3 per cent this year, compared with an average gain of 2.3 per cent for developed markets. This would make Singapore the only AAA-rated market that offers positive inflation-adjusted yields.
Singapore's bonds may remain supported because of a lack of supply of long-dated debt this month, said Mr Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore.