Fixed deposit and T-bill yields diverge

If you’re struggling to read the market these days, you’re not the only one. After all, the tug of war between inflation and recession concerns has led to mixed signals. 

Just this week, Fed Chairman Jerome Powell reiterated that there might be two further rate hikes this year, driving profit-taking in the stock market. 

We were hence surprised to see that some local banks have cut their 6-month fixed deposit rate to 2.7% p.a.

Thankfully, the 6-month T-bill cut-off yield remained high at 3.89% p.a. as demand for T-bills fell. 

If you are looking to make sense of this, come have a fireside chat with Beansprout at the UOB Wellness Festival this week. We will be sharing tips on how you can improve your financial well-being at 12.20pm on 27^th June at UOB Plaza Atrium! 

⏰ WHERE TO PARK YOUR SAVINGS?

What happened? 

UOB and OCBC have lowered their 6-month fixed deposit rate to 2.7% p.a. in June 2023.

What does this mean?

Data from the MAS shows that total fixed deposits in Singapore have surged to S$858 billion in April 2023 from S$543 billion in May 2022. 

On the other hand, the economic slowdown has led to a lower demand for loans from the banks. 

As a result, banks may see less of a need to dangle high interest rates to attract deposits.

Why should I care? 

The cut in fixed deposit rate should not deter us from finding ways to earn a higher interest rate on our savings.

Learn more about the other options we are exploring to make our savings work harder.

💡 THE BIG IMPORTANT STORY

Keppel DC REIT removed from the STI. What’s next for the datacentre REIT?

Keppel DC REIT was removed from the Straits Times Index (STI) on 19 June 2023. Here's what unitholders of the datacentre REIT could look out for next.

🚗 WHAT'S MOVING

• Alibaba (BABA) announced a management reshuffle in a move seen by investors as an attempt to revive growth. Executive Vice Chairman Joseph Tsai will take the position of Chairman. Eddie Wu, now chairman of Alibaba’s Taobao division, will take over as CEO. 
• Nio (NIO) found a new investor in CYVN, an investment vehicle majority owned by the Abu Dhabi government. CYVN will invest US$738.5 million into new shares of Nio at US$8.72 per share.
• Grab (GRAB) is cutting over 1,000 employees or 11% of its workforce due to challenging conditions. CEO Anthony Tan cited 'fundamental step-changes' in its operating model in explaining the layoffs.
• Sembcorp Industries’ share price fell after the Energy Market Authority (EMA) announced that it will cap wholesale electricity prices in Singapore from 1st July. Read our analysis here
• Sabana Industrial REIT’s manager has criticised activist investor Quarz Capital’s proposal for the REIT to use an internal manager instead, and has warned unitholders that following through on the proposal might destroy value.

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

🤝 A MESSAGE FROM OUR PARTNER

Join the iFAST Mid-Year Review 2023 to gain insights into investment prospects in the current market, and the best ways you can implement these ideas into your portfolio.

Some of the topics lined up include:
- Don't know where to invest in a recession? Here are some ideas that could outperform
- Want to invest in Artificial Intelligence? Here’s the best way to do it
- Who will be the next Asian Tigers?

Stand a chance to win lucky draw prizes worth over S$3,000! Register for free here

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 26 June: Carnival Cruise Line earnings
• Tuesday, 27 June: SGX Academy Webinar: Fundamental Valuation for Equities, UOB Wellness Festival 
• Wednesday, 28 June: UOB Wellness Festival, Micron earnings
• Thursday, 29 June: Singapore public holiday, Nike earnings

Source: Bloomberg, SGX 

🍭 THAT’S INTERESTING

Applications for UOB debit and credit cards rose sharply after it was announced that cardholders will have privileged access to the pre-sale and reserved ticket allotment for Taylor Swift’s concerts in Singapore. UOB said that it had anticipated the surge in applications, and will ‘work as fast as they can’ to process the applications. 

Source: Bloomberg