Weekly recap: Rising hopes of interest rate cuts

By Beansprout • 13 Jan 2024 • 0 min read

Investors increasingly expect that the Fed will cut interest rates in March despite hotter than expected inflation

what happened in the markets 13 jan 2024

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Last week, we shared that some banks have cut their fixed deposit rates.

It was hence not a surprise that some promotional interest rates on savings accounts have been taken down.

However, we were pleased to see that most banks continue to offer fairly attractive interest rates on savings accounts in January 2024.  

Likewise, the best priority banking accounts continue to dangle attractive rewards and promotional interest rates for customers

Despite the fall in interest rates, the yield on the 6-month Singapore T-bill has remained fairly steady.

We find out if the spike in T-bills to be issued in the upcoming auction might help to support its yield. 

what happened in the markets 13 jan 2024
Source: Bloomberg. Price as of market close on 12 Jan 2024

🤓 RISING HOPES OF INTEREST RATE CUTS

What happened? 

US inflation rose more than expected in December, with the consumer price index (CPI) rising by 3.4% compared to the previous year. 

The acceleration in inflation was driven largely by higher energy and housing prices. 

What does this mean?

Despite the pick-up in inflation, investors remain hopeful of an interest rate cut in March.

According to the CME Fedwatch Tool, the probability of a Fed rate cut in March rose to 77% as of 13 January 2024.  

Why should I care? 

US stocks shrugged off the hotter than expected inflation data to post further gains. 

The US 10-year government bond yield fell to below 4% once again, reversing the increase earlier this year.

Singapore REITs had a mixed week, as Keppel Pacific Oak US REIT rose by 7.4%, and OUE Commercial REIT fell by 6.9%.

Check out our Compare Singapore REITs tool to find the best REIT for your portfolio

💡 THE BIG IMPORTANT STORY

Will the T-bill yield rise with a spike in issuance size?

The yield on the upcoming 6-month Singapore T-bill may be supported by a significantly larger issuance size.

6 month singapore t-bill auction 18 jan 2024

 

🚗 WHAT'S MOVING

  • OCBC has priced S$450 million in perpetual capital securities at 4.05% under its US$30 billion global medium term note programme. They are first callable in 2029 and are intended to qualify as OCBC’s additional Tier-1 capital. 
  • Frasers Property issued a statement refuting talk of a potential sale of the company or its assets. This follows an article by the Wall Street Journal (WSJ) which reported that the company's majority owners could put the company or some of its assets up for sale as part of a strategic review.
  • Manulife US REIT’s portfolio valuation fell by 8% to US$1.4 billion as at end-December 2023. The REIT manager announced that it expects the REIT to report a loss for FY2023 due to fair-value losses arising from the valuation decline. 
  • Novo Tellus Alpha Acquisition is not concluding a business combination ahead of the 26 January deadline, after thorough evaluation of potential targets as well as taking into consideration current market conditions.
  • NIO’s share price fell after its peer Tesla cut prices of its Model 3 and Model Y electric vehicles in China. We speak to the head of investor relations of NIO, who shared more about the company's strategy of building premium electric vehicles. 

Source: Bloomberg, CNBC, Financial Times, Business Times, Edge Singapore

🤝 LEARN AND INVEST WITH WEBULL

Nvidia’s stock tripled in 2023. Can its rally continue?

Nvidia’s share price gained 246% in 2023 as it took centerstage in the AI boom. We find out if Nvidia’s share price can continue to do well in 2024.

nvidia nvda share price all time high jan 2024

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

  • Monday, 15 Jan: US Public Holiday
  • Tuesday, 16 Jan: Goldman Sachs, Morgan Stanley earnings
  • Wednesday, 17 Jan: US retail sales data
  • Thursday, 18 Jan: 6-month Singapore T-bill auction

Source: Bloomberg, SGX 

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