Inflation's coming down

For the first time since 2020, consumer prices in the US declined. 

Investors cheered this piece of good news after a year of sky-high inflation. 

Well, maybe with the exception of Elon Musk, as the share price of Tesla continued to fall after it announced the latest round of global price cuts. 

The key question for many of us is – how will this affect interest rates in 2023?

We evaluate whether the 6-month or 12-month Singapore T-bill is a better option in light of the current interest rate outlook. 

🤑 Inflation's coming down

What happened? 

The US consumer price index for December fell 0.1% from the previous month, meeting investor expectations of an easing of inflation.

What does this mean?

Prices were 6.5% higher compared to the previous year. This marked the sixth consecutive month that the US inflation rate has been coming down. 

The fall in prices was led by lower energy costs, as the price of gasoline fell in recent months. 

Why should I care? 

The easing of inflation pressure could pave the way for the Fed to slow down its pace of interest rate increase.

Investors are currently expecting the Fed to hike interest rates by 0.25% in its next meeting on 1 February 2023. 

🚗 MOVING THIS WEEK

• Tesla (TSLA) cut prices for its electric vehicles (EV) globally by up to 20%, driving greater competitive pressure for other EV manufacturers. 
• Microsoft (MSFT) is reportedly in talks to invest up to $10 billion in OpenAI, which created the popular AI bot ChatGPT, according to Bloomberg.
• JPMorgan (JPM) reported fourth quarter earnings above market expectations, driven by higher net interest income. 
• The Chinese government will reportedly take “golden shares” in units of Alibaba and Tencent to retain option of control over China’s tech giants, according to the Financial Times.
• Tourism-related stocks in Singapore including Genting Singapore and Singapore Airlines saw gains as China’s re-opening drove optimism. 

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

💡 THE BIG IMPORTANT STORY

Should you buy the 6-month or 1-year T-bill? Here's how we're deciding.

We explore the pros and cons of purchasing a 6-month and 1-year Singapore T-bill in the upcoming auctions in January 2023. 

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 16 Jan: China GDP
• Tuesday, 17 Jan: Goldman Sachs, Morgan Stanley earnings
• Wednesday, 18 Jan: Singapore 6-month T-bill Auction
• Thursday, 19 Jan: SGX Academy webinar: Outlook 2023: A top-down view

Source: Bloomberg, SGX 

🍭 THAT’S INTERESTING

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Charles & Keith invited Zoe Gabriel, 17, and her father to have lunch with its founders, after the teen was mocked online for calling the Singaporean label a “luxury” brand on TikTok. Zoe's clips have gone viral with more than 8.5 million views.  French luxury giant LVMH acquired a 20% stake in Charles & Keith in 2011, but the founders have since bought back the stake and grown its footprint to more than 600 stores globally.

Source: Straits Times