Weekly recap: T-bill yield stays high on inflation worries

By Gerald Wong, CFA • 13 Apr 2024 • 0 min read

The T-bill yield remained high as investors lower their expectations of rapid interest rate cuts.

what happened in the markets 13 april 2024

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I was speaking at an event this week when one of the participants shared his anxiety about having adequate savings for retirement.

He told me that while he has put aside some money, the elevated level of inflation is making him think about his financial plans once again. 

After all, inflation in the US has remained persistently high in recent months, leading to rising concerns that the Fed may not be able to cut interest rates quickly.

This may explain why the yield on the latest 6-month Singapore T-bill has remained elevated at 3.75%, even with the cut in fixed deposit rates

With many investors eyeing the upcoming 1-year Singapore T-bill, we share if it might be a better option compared to the 6-month T-bill

If you are looking to tap on higher US interest rates, the good news is that the best US dollar fixed deposit rate has been raised to 5.4% p.a. for a 3-month tenure.

Alternatively, if you are looking for ways to earn potentially higher yield, we share what we would consider when choosing a cash management account.

How is higher inflation affecting your financial plans? If you have a question you'd like us to help answer, leave a note in the comments section below. 

Gerald, Founder of Beansprout

what happened in the markets 13 april 2024
Source: Bloomberg data. Price as of market close on 12 April 2024

 

RATE CUTS MAY NOT COME SO SOON

What happened? 

The US Consumer Price Index (CPI) rose by 3.5% compared to the previous year, exceeding forecasts by economists.

This marks the third consecutive month that inflation has been higher than expectations, driving concerns that inflation may remain sticky.

What does this mean?

Following the stronger than expected inflation data, investors are now expecting that the Fed will slow down on its pace of interest rate cuts

According to the CME FedWatch Tool, the markets are now expecting just two rate cuts in 2024, down from three previously.

Why should I care? 

With easing expectations of rate cuts, the US 10-year government bond yield rose to above 4.5%. from 4.4% a week ago.

Coupled with rising geopolitical tensions in the Middle East, the S&P 500 fell by 1.6% to close at a one-month low.

Singapore REITs largely fell with higher bond yields, with losses led by Mapletree Logistics Trust, CapitaLand Integrated Commercial Trust and CapitaLand Ascendas REIT. 

Learn more about what the jump in inflation may mean for your savings and investments.

🚗  MOVING THIS WEEK

  • Frasers Property expects to report a significant decrease in attributable profit for the 1HFY2024 ended 31 March compared to the previous year, due to fair value losses and impairments for commercial properties in the UK. 
  • City Developments will be selling 58 units of The Residences at W Singapore Sentosa Cove at around S$1,648 per square foot (psf) for a three-bedder, a 40% discount to the median selling price of S$2,810 psf since April 2010. 
  • Seatrium’s CEO said that the company is positioned to capitalise on the ‘global energy trilemma’ of energy security, sustainability and affordability, and believes that the 20-to-1 share consolidation will help to attract institutional investors. 
  • Tesla’s share price rose after Elon Musk announced the company will unveil the Robotaxi in August this year.
  • Meta is deploying a new homegrown chip to help power its artificial intelligence (AI) services, aiming to reduce its reliance on semiconductors from Nvidia and other external parties.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

Is the 1-year T-bill better than the 6-month T-bill and fixed deposits?

The closing yield on the 1-year Singapore T-bill is lower than the 6-month T-bill at 3.54%. However, investors of the 1-year T-bill may face lower re-investment risks.

1 year t bill vs 6 month tbill vs fixed deposit april 2024.jpg

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

  • Monday, 15 April: Goldman Sachs earnings
  • Tuesday, 16 April: Morgan Stanley, Bank of America earnings
  • Thursday, 18 April: Taiwan Semiconductor Manufacturing Company (TSMC) earnings, Singapore 1-year Singapore T-bill auction
  • Friday, 19 April: CapitaLand Integrated Commercial Trust earnings

Get the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

Source: SGX, Bloomberg, Refinitiv

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