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Your bite-sized weekly update (17 Sep)

17 Sep 2022

US inflation surprise and all eyes on upcoming FOMC

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THIS WEEK IN MARKETS

Inflation was supposed to be coming down by now.  After all, US gasoline prices have fallen for 89 consecutive days, as calculated by some analysts. 

But it was not to be. US consumer prices in August rose by another 0.1% compared to the previous month. 

With this inflation surprise, some economists are now expecting the US Federal Reserve to raise interest rates by 1.0 percentage point (100 basis points) next week. 

The US stock market didn't take this very well, reversing most of the gains it made in the previous week. Closer to home, the Singapore market outperformed as higher interest rate expectations lifted sentiment on the banks. 

The savers amongst us also cheered the yield on the latest 6-month Singapore Treasury Bill, which reached 3.32% in the latest auction. 

All eyes are now on what the Federal Reserve will do and say at its meeting next week. 

IMPORTANT

Weekly wrap 17 Sep
Source: Bloomberg. Price as of market close on 16 Sep

 

  • Inflation still red hot. The US Consumer Price Index (CPI) climbed by 8.3% in August compared to a year ago, higher than market expectations for an 8.1% increase. Read our analysis here
  • Time to travel. The US dollar surged compared to major currencies after the stronger than expected US inflation figure. The Pound slid to its weakest level in almost four decades with growing evidence of a UK recession.The Chinese Yuan weakened past a key 7 per dollar level for the first time in more than two years. The Yen rebounded from near a 24-year low on signs the Bank of Japan is preparing an intervention to prop up the currency. 

ICYMI

  • FedEx (FDX) withdrew its full-year guidance and issued a profit warning due to declining package delivery volumes around the world, leading to heightened fears of a slowing global economy.
  • Adobe (ADBE) announced that it will buy out design software firm Figma in an agreement worth about $20 billion in cash and stock.
  • Starbucks (SBUX) boosted its long-term forecast and said it expects double-digit growth in revenue and earnings per share over the next three years.
  • Tencent Music Entertainment Group (TME) is going ahead with its Hong Kong listing plans with the objective to start trading in the Asian financial hub as soon as next week
  • Frasers Hospitality Trust privatisation bid fails to receive 75% approval in scheme meeting, 70.91% of stapled security holders representing 74.88% of units voted in favour of the proposed scheme.
  • Frasers Centrepoint Trust has entered into 2 agreements to acquire an additional 10% interest in Waterway Point, a 4-storey suburban mall in Punggol, for S$132.3 million.
  • Frasers Property corporate green retail note’s initial public offer of S$300 million was 1.48 times subscribed and initial placement of S$120 million was 2.04 times subscribed. The total offer was upsized from S$420 million to S$500 million. Read our analysis here
  • Singapore Medical Group and Moya Holdings Asia receive separate privatisation offers.
  • Ethereum completed a revamp of its blockchain network called the Merge, making it the world's most-ambitious software in the crypto world's to date. Read our analysis here

Source: Bloomberg, CNBC, Business Times, Edge Singapore

THE BIG IMPORTANT STORY

 Singapore 6-month T-bill interest rate now at 3.32% per annum!

We prefer to put our spare cash in the Singapore 6-month Treasury-bill (T-bill) with the attractive interest rate of 3.32% per annum in the latest auction.

T bill September 2022.jpg

WHAT’S UP THIS WEEK

Wednesday, 21 Sep 

  • US: FOMC Press Conference 
  • i3 Investor webinar featuring Beansprout: How to ride on structural growth of the EV sector. Register here 

Thursday, 22 Sep 

  • SIAS webinar featuring Beansprout: Ask SIAS - A deep dive into investments. Register here 

Get the full economic and Singapore earnings calendar on the SGX Academy

Source: SGX, Bloomberg, Refinitiv

THAT’S INTERESTING

  • End of pandemic?  The World Health Organization (WHO) chief’s comment that the end of the pandemic is within reach was met with some censorship in China, the only major country still trying to stop the spread of the virus. WHO Director-General Tedros Adhanom Ghebreyesus said Wednesday that “we have never been in a better position to end the pandemic. We are not there yet, but the end is in sight.” China Newsweek and popular online media outlet Guancha.cn reported on Tedros’s remark and shared videos on social media platform Weibo, but those were removed in the afternoon. (Source: Bloomberg)

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