Weekly recap: Fixed deposit rates stable as Fed revives rate cut hopes

This week, I saw a survey which indicated that both young and older investors picked fixed deposit as their top investment choice.

This did not come as too much of a surprise to me, since there is frequent discussion about the best fixed deposit rate in the Beansprout community.

If your preferred investment choice is fixed deposit too, the good news is that the best fixed deposit rate in May has stayed at 3.35% p.a.

However, if you are looking to earn a potential yield above the best fixed deposit rate, we share why the yield on the upcoming 6-month T-bill auction on 9 May could stay high. 

With the interest rate cut on the UOB One savings account from 1 May, we went on a hunt for the best savings accounts that allow our savings to work harder. 

And if you are looking to earn bonus miles with your savings account, the UOB Lady’s Card now allows you to earn bonus miles when paired with the UOB Savings Account. Men can now apply for the UOB Lady’s Account too!

Lastly, if your top investment choice is Singapore blue chip stocks, you might have noticed that DBS’ share price has recently reached an all-time high after its bonus share issue. We find out if DBS still looks attractive after its record first quarter results 

At the end of the day, the top investment choice often differs for each individual depending on what we may be investing for and how comfortable we are with these picks.

Whatever your choice – the key is to start now to allow the magic of compounding to work.

Happy growing!

Gerald, Founder of Beansprout

🙏 FED KEEPS INTEREST RATE HOPES ALIVE

What happened? 

The US Federal Reserve kept its benchmark interest rate unchanged at its latest meeting this week. 

At the same time, Fed Chairman Jerome Powell kept rate cut hopes alive by saying that it’s unlikely that the next policy move will be a rate increase.

What does this mean?

Despite the inclination towards rate cuts, Powell also acknowledged that it was taking longer than previously expected for officials to gain confidence to start cutting interest rates.

According to the CME Fedwatch Tool, the market is pricing in a probability that there might be two rates cuts this year, higher than the one rate cut expected prior to the Fed meeting, but below the six rate cuts expected at the start of the year. 

Why should I care? 

US stocks bounced slightly as investors took Powell’s comments as a signal that while interest rate cuts are delayed, they are not derailed.

At the same time, strong earnings reported by large cap tech stocks, including Apple, continued to boost sentiment.

Singapore REITs saw mixed performance as bond yields remain elevated, with gains led by REITs with European exposure including IREIT and Elite REIT.  

🚗  MOVING THIS WEEK

• DBS reported a net profit of S$2.95 billion in the first quarter of 2024, an increase of 15% year-on-year and above market expectations of S$2.5 billion. DBS declared an interim dividend of S$0.54, and additional shares arising from its bonus issue will also qualify for this dividend.  Read our analysis here. 
• Singtel expects to recognise around S$3.1 billion in exceptional net-cash impairment provisions for the second half year ended 31 March, including a S$2 billion provision on goodwill on Optus. This will result in a net loss for the period. However, it does not expect the provisions to affect its dividend payment. 
• Seatrium plans to buy back up to a maximum 2% of its total issued shares via open market purchases under a S$100 million share buyback programme. 
• Digital Core REIT reported distributable income of US$10.6 million for its first quarter of 2024, down 2.4 per cent from US$10.9 million a year ago. Read our analysis here. 
• Apple reported second quarter results that showed sales fell less than expected and profit exceeded forecasts. The company also announced that it was authorising an additional $110 billion for share repurchases and increased its dividend to $0.25 per share. 

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

Will the T-bill yield stay high in the auction on 9 May?

The closing yield on the 6-month Singapore T-bill has remained high at 3.74% despite the fall in US government bond yields.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Monday, 6 May: Lendlease REIT earnings
• Tuesday, 7 May: Frasers Logistics & Commercial Trust earnings
• Wednesday, 8 May: UOB earnings
• Thursday, 9 May: Singapore 6-month T=bill auction
• Friday, 10 May: OCBC earnings

Get the full list of Singapore stocks, REITs and ETFs with upcoming dividend payments with our dividend calendar.

Source: SGX, Bloomberg, Refinitiv

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