Weekly recap: T-bill yield and fixed deposit rates fall further

It’s getting harder to find ways to earn a high yield on our cash savings. 

The cut-off yield on the latest 6-month Singapore T-bill auction fell sharply to 3.54% as demand surged. 

This follows a decline in the cut-off yield on the 1-year Singapore T-bill to 3.45% just a week ago. 

Likewise, banks have continued to cut their fixed deposit rates in February, with the best 6-month fixed deposit rate now at 3.55%. 

The good news this week is that the 10-year average return on the latest SSB has rebounded to 2.88%. We find out if it is worthwhile applying for. 

🏦 FED COOLS RATE CUT EXPECTATIONS

What happened? 

The US Federal Reserve (Fed) has kept its benchmark rate at 5.25-5.5% as expected.

However, investors focused on comments by Fed Chairman Jerome Powell that a March rate cut is unlikely.

What does this mean?

Investors have been increasingly speculating that the Fed may start lowering rates in March with inflation moderating in recent months. 

Following the latest Fed meeting, the probability of a rate cut in March fell to 38% from 46% a week ago, based on data from the CME Fedwatch tool. 

Why should I care? 

The S&P 500 climbed higher to reach a record high even as the Fed indicated that it is not ready to start cutting interest rates. 

Gains were led by mega-cap tech stocks such as Meta and Amazon, which reported stronger than expected earnings. 

💡 THE BIG IMPORTANT STORY

3 Singapore stocks that may turnaround in 2024

These three Singapore stocks are going through strategic reviews that may drive a turnaround in their performance in 2024.

🚗 WHAT'S MOVING

• Keppel Corp reported earnings from continuing operations of S$551 million in the second half of 2023, an increase of 36% compared to the previous year. The company has proposed a final dividend of 19 cents per share, which will bring its full year cash dividend to 34 cents. 
• Seatrium is expecting to make a significantly higher net financial net loss in FY2023 compared to the yer before. This is driven by a material non-cash write-down for its surplus non-core assets as well as excess and obsolete inventories, following a strategic review of its business focus.
• CapitaLand Ascendas REIT announced a distribution per unit (DPU) of 7.441 cents for the second half of 2023, down 6.1% compared to the previous year. The lower distribution was driven by higher interest expenses even as its net property income increased. 
• Mapletree Pan Asia Commercial Trust reported a distribution per unit (DPU) of 2.20 cents for its third quarter ended 31 December 2023, 9.1% lower compared to the previous year. While net property income grew with robust performance in its Singapore portfolio, this was offset by higher borrowing costs. 
• Keppel Pacific Oak US REIT announced that its portfolio value fell 6.8% to US$1.3 billion as at 31 December 2023, driven by an increase in capitalisation and discount rates, as well as higher vacancy rates assumed for 2024. The REIT has also delayed the announcement of its full year results to a later date.

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

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 5 Feb: Paragon REIT earnings
• Tuesday, 6 Feb: CapitaLand Integrated Commercial Trust earnings
• Wednesday, 7 Feb: Alibaba, DBS earnings
• Thursday, 8 Feb: Starhub, Manulife US REIT earnings
• Friday, 9 Feb: Lunar New Year Eve

Source: Bloomberg, SGX 

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