Weekly recap: Fixed deposit and savings account interest rates cut

Like many others, I started the month looking for the best savings account with highest interest rates. 

After UOB announced that it would be cutting interest rates on the UOB One account from 1 May, we were curious to find out if there are other ways we can make our savings work harder. 

To help you decide, we also built a calculator to compare the interest rate you would earn on the UOB One and OCBC 360 account. 

The cut in interest rate may not come as a major surprise to some, as fixed deposit rates have been falling in recent months. 

We find out what this decline in interest rates would mean for the upcoming T-bill auction on 11 April, especially as the T-bill yield has remained high in recent weeks.

If you are looking to lock in interest rates, the good news is that the 10-year average return on the latest SSB has gone up further to 3.06%.

As the week progressed, it would seem to me that there are avenues that we can still earn a good yield on our savings, if we know where to look.

I hope these resources would provide a few ideas on how to start. Happy yield hunting! 

Gerald, Founder of Beansprout

🔥 INFLATION CONCERNS ARE BACK

What happened? 

Recent readings on both job gains and inflation in the US have come in higher than expected, leading to rising doubts that interest rates will be cut aggressively. 

The US labour market continued to the strong with 303,000 jobs added in March, exceeding economists’ forecast of 200,000. 

At the same time, oil prices jumped above $90 per barrel this week, driven by rising geopolitical uncertainty and supply cut by OPEC countries. 

What does this mean?

Fed Chairman Jerome Powell noted that interest rates will only be cut when officials have greater confidence that inflation is moving sustainably down.

While investors largely still expect the first rate cut in June, the probability that there will only be two rate cuts this year has risen to 30% from 25% a week ago according to the CME Fedwatch Tool.

Why should I care? 

The 10-year US government bond yield briefly jumped to a new 2024 high of 4.429% on Wednesday and dampened sentiment on US stocks. 

The performance of Singapore REITs was mixed with the increase in government bond yields, with losses led by CDL Hospitality Trust, OUE Commercial REIT, Frasers Centrepoint Trust, Lendlease REIT and Mapletree Industrial Trust.  

🚗  MOVING THIS WEEK

• Singtel again denied media reports over a potential deal over its Australian subsidiary Optus, after the Australian media reported that its talks with Canadian private equity firm Brookfield to sell its 20% sake in Optus failed to result in a deal. Read our earlier analysis of Singtel here. 
• Seatrium announced that it has secured contracts worth $350 million for repairs and upgrades.
• AEM won a contract for its automated burn-un (ABI) test system from a “major fabless providers” of high performance compute and artificial intelligence (AI) semiconductor chips. 
• Five Singapore Depository Receipts (SDRs) linked to Thailand’s blue chip companies were listed on the Singapore Exchange (SGX) on 1 April. Retail investors can now buy and sell shares of five companies - Advanced Info Service (AIS), Delta Electronics, Gulf Energy, Kasikorn Bank, and Siam Cement, in the same way they would with Singapore shares. 
• Tesla’s share price fell after the electric vehicle (EV) maker announced that it delivered 386,810 vehicles in the first quarter, missing investor expectations as consumer demand slowed and the company faced multiple disruptions at its plant.

Source: Bloomberg, CNBC, Business Times, Edge Singapore

💡 THE BIG IMPORTANT STORY

Will the T-bill yield rise above 3.8% in the auction on 11 April?

The closing yield on the 6-month Singapore T-bill is at 3.75%, below the cut-off yield in the previous auction.

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Wednesday, 10 April: Singapore Public Holiday, US CPI data
• Thursday, 11 April: Singapore 6-month Singapore T-bill auction, Live seminar: How to tap on investment opportunities in Gold 
• Friday, 12 April: Singapore MAS April 2024 Monetary Policy Statement, JPMorgan, Citi earnings

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

Source: SGX, Bloomberg, Refinitiv

🌱 PLANT THE SEED OF WEALTH

"The stock market is a device for transferring money from the impatient to the patient"
 

- Warren Buffett, Legendary value investor

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