T-bill Surprise

By Beansprout • 10 Dec 2022 • 0 min read

China rally continues, global recession fears, and T-bill yield surprise.

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Just when many were expecting the yield on the T-bill to start falling, the latest auction came with a big surprise.

The yield on the 6-month T-bill reached 4.4%, the second highest since the return last peaked at 4.73% in 1988.

Our analysis shows that not only were there less subscriptions for the latest T-bill auction, the competitive bids that were submitted were higher too. 

One of the reasons for the lower demand might be that some might be busy watching the World Cup, which has led to lower trading activity in the past.  If you’re caught up in the football fever too, we share how you can earn make your money work harder while watching the World Cup. 

The downside of higher interest rates is that we need to make higher interest payments for our loans. With the SORA crossing 3% earlier this week, we evaluate if it makes more sense to go for a fixed or floating rate mortgage package now. 

In the coming week, we'll be watching out for the Fed meeting where another rate hike of 0.50% is widely expected.

Market Update
Source: Bloomberg. Price as of market close on 9 Dec

 

72.pngSay hi to China

What happened?

China has further eased its COVID-19 restrictions following widespread public discontent.

What does this mean?

Some of the revised measures include allowing those infected with COVID-19 but experiencing mild or no symptoms to isolate themselves at home. 

Snap lockdowns also must be applied more precisely, targeting specific buildings, units, or floors instead of shutting down entire neighbourhoods or imposing city-wide lockdowns.

Why should I care?

Chinese stocks extended a rally on further signs that China is moving away from its zero Covid policy. However, Goldman Sach’s President John Waldron warned that China’s road to reopening could be “bumpy”. Reflecting the weakness in economy, China’s exports and imports for the month of November declined at their fastest pace since February 2020.

🚗 MOVING THIS WEEK

  • Apple (AAPL) has scaled back its plans for a self-driving electric vehicle and pushed back the target launch date for the car to 2026, according to a Bloomberg report. 
  • The US Federal Trade Commission is trying to stop Microsoft's (MSFT) $69 billion acquisition of Activision Blizzard (AVTI), arguing that the deal between the Xbox maker and the gaming publisher would harm competition.
  • Carvana (CVNA)’s largest creditors reportedly signed an agreement to cooperate in potential restructuring negotiations, driving concerns of growing bankruptcy risks.
  • Stocks in Singapore with significant Hong Kong exposure, including Dairy Farm International Retail Group and Hongkong Land, bounced after Hong Kong further eased its quarantine and isolation measures.

  • The cash offer for Chip Eng Seng has been raised to S$0.75, a $0.03 or 4.2% improvement over the initial offer of S$0.72 a share.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

T-bill yield jumps to 4.4% p.a.! Why is the bond yield surprisingly high?

 In the latest auction on 8 December, the cut-off yield on the Singapore 6-month T-bill surprisingly jumped to 4.4% p.a.

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🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

  • Monday, 12 Dec: Oracle earnings
  • Tuesday, 13 Dec: US CPI 
  • Wednesday, 14 Dec: Federal Reserve interest rate decision
  • Thursday, 15 Dec: Adobe earnings

Source: SGX, Bloomberg, Refinitiv

🍭 THAT’S INTERESTING

Betting Nation

A record-high level of bets amounting to $9.2 billion were placed on legal lottery and sports in Singapore for the year ending March 2022. This is an increase of about 40% compared to the previous financial year, when S$6.6 billion was spent on such bets. The increase in gambling activity has been attributed to the convenience and accessibility of the Singapore Pools online betting site, according to The Straits Times.

Source: Mothership

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