T-bills beat fixed deposits for now

By Beansprout • 08 Jul 2023 • 0 min read

T-bills yields move higher, while fixed deposit rates fall

What to expect in markets next week 8 July 2023

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Here’s the bad news – Fixed deposit rates continue to fall in July, with the best 6-month fixed deposit rate now only at 3.5% p.a.

Not long ago, we just saw UOB and OCBC cutting their 6-month fixed deposit rate to 2.7% p.a.

And now the good news – the yield on the latest Singapore 6-month T-bill rose to 3.99% p.a.

It’s no wonder that we have seen more people asking about the T-bill recently. 

If you missed out on the current one, there’ll be a 6-month T-bill auction on 20th July and a 1-year T-bill auction on 27th July. 

Find out if it might be more worthwhile to apply for the 6-month or 1-year T-bill auction, and calculate how much more interest you can potentially earn by investing your CPF OA funds into the T-bill using our T-bill calculator.

Weekly market performance 8 July 2023
Source: Bloomberg. Price as of market close on 7 July 2023

 

⛑  NO RECESSION IN SIGHT 

What happened? 

The U.S. labour market remained strong with private sector jobs surging by 497,000 in June, significantly above market expectations. 

What does this mean?

The strength in the labour market was further supported by data which showed that the unemployment rate fell to 3.6% from 3.7% in the previous month. 

With little signs of the economy cooling, the U.S. Federal Reserve (Fed) is expected to raise interest rates further to keep inflation in check.

Investors have assigned a more than 90% probability that the Fed will raise interest rates by another 0.25% in its meeting later this month. 

Why should I care? 

U.S. bond yields continue to climb, with the yield on the 2-year U.S. government bond reaching close to 5%. 

This has also translated to higher Singapore government bond yields, and weakness in the share price of Singapore REITs.

 

💡 THE BIG IMPORTANT STORY

T-bill yield soars to 3.99% in latest auction. Why the jump?

The cut-off yield for latest Singapore 6-month T-bill rose to 3.99% p.a., the highest level since January this year.

T-bill auction result 6 July 2023

 

🚗 WHAT'S MOVING

  • Meta launched Threads, its text-based social media product which is seen as a direct competitor to Twitter. CEO Mark Zuckerberg announced that Threads has exceeded 70 million users one day after  its launch. 
  • Tesla delivered 466,140 vehicles on the second quarter, representing a 83% increase from the previous year. 
  • Alibaba’s affiliate Ant Group faces a $1.1 billion fine by Chinese authorities, which was seen by investors as clearing the way for Ant to get necessary licenses and potentially go public eventually.
  • OCBC aims to generate S$3 billion in total incremental revenue over the next three years until 2025, as it invests more than S$50 million to build up its transaction banking capabilities in Greater China.
  • SingPost will work with the government on a “fundamental review” of the future of Singapore’s postal service. This may allow SingPost to raise postage rates in the future to remain viable.

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

 

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

Source: Bloomberg, SGX 

 

🍭 THAT’S INTERESTING

Taylor Swift’s fans in Southeast Asia rushed to sign up for UOB cards in the frenzy to get hold of the Eras Tour concert tickets in Singapore. UOB’s daily average credit card applications across Singapore, Thailand, Malaysia, Indonesia and Thailand rose 45% in the week her concert dates was announced, compared with earlier in June. The presale tickets for UOB cardholders were sold out within three hours when ticket sales opened on 5th July. 

Source: Bloomberg

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