Weekly recap: T-bill yield falls but fixed deposit rates move higher

The cut-off yield on the 6-month T-bill fell to 3.87% in the auction this week, disappointing investors who were expecting the attractive yield of 4.07% in the previous auction to be sustained. 

However, the interest rates on fixed deposits continue to rise, with UOB raising its 6-month and 12-month rate to 3.1%.

USD fixed deposit rates have also gone up with higher interest rates in the US, with the best 6-month and 12-month fixed deposit rate at 5.25%. 

The mixed movements naturally led to many questions about what to expect for the upcoming 1-year T-bill auction on 19 October. 

We look at a few indicators to find out if the 1-year T-bill might be a better investment compared to the 6-month T-bill and fixed deposits.

If you have been wanting to learn how to build a dividend portfolio, join us for our free introductory webclass on dividend investing on 18 October. 

🔥 INFLATION STAYS HOT

What happened? 

The US Consumer Price Index (CPI) rose by 3.7% in September compared to the previous year, slightly above market expectations of a 3.6% increase. 

What does this mean?

Despite attempts by the US Federal Reserve (Fed) to bring down inflation, price pressures remain significant. 

This has also led the International Monetary Fund (IMF) to lift its global inflation forecast for 2024, and called for central banks to keep policy tight until there is a sustained easing in price pressures. 

The pace of consumer price increases in 2024 is projected to be 5.8%, up from 5.2% three months ago. 

Why should I care? 

Investors remain focused on inflation data to get an indication of the Fed’s next interest rate move. 

Despite dipping in the past week, the Nasdaq Index has seen strong gains year-to-date. We find out if the QQQ ETF is a good way to gain exposure to US tech stocks.  

💡 THE BIG IMPORTANT STORY

Here’s why diversification may be a sound REIT investing strategy

The share price performance of Singapore REITs has been mixed so far this year

🚗 WHAT'S MOVING

• ST Engineering’s share price bounced with global defence stocks with growing concerns about the Middle East conflict. Click here for ST Engineering share price and analysis.
• SGX securities turnover value fell to S$17.3 billion in September, a 26.5% decline compared to the previous month. The weaker trading volume was attributed to a risk-off mood from central bank meetings. Click here for SGX share price and analysis.
• Cromwell European REIT has completed the divestment of Viale Europa 95, one of its largest non-core assets for EUR 94 million (S$$135.4 million). According to the company, the divestment is consistent with its previously stated strategy of targeted asset sales, reducing exposure to the office and ‘other’ sectors and focusing more on the logistics/light industrial asset class. Click here for Cromwell European REIT share price and analysis.
• Walt Disney (DIS) share price rose after the Wall Street Journal (WSJ) reported that activist investor Nelson Peltz’s Trian Fund Management has hiked its stake and could seek multiple board seats. 
• Microsoft (MSFT) has closed its acquisition of Activision Blizzard after a lengthy regulatory review, giving the company a portfolio of video game franchises including Call of Duty, Diablo and Starcraft. 

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

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 16 Oct: Keppel DC REIT earnings
• Tuesday, 17 Oct: Keppel REIT earnings
• Wednesday, 18 Oct: Beansprout Webinar: Dividend Investing Introductory Webclass, Keppel Pacific Oak US REIT earnings
• Thursday, 19 Oct: Singapore 1-year T-bill auction, Keppel Corp earnings
• Friday, 20 Oct: Endowus WealthTech Conference Day 1
• Saturday, 21 Oct:  Endowus WealthTech Conference Day 2

Source: Bloomberg, SGX 

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