Weekly recap: What’s next for T-bills, fixed deposits and stocks?

By Beansprout • 09 Sep 2023 • 0 min read

Fixed deposit rates saw mixed movements in September while SSB rates rose compared to last month.

what to expect in the markets 9 sep

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At the start of every month, we will await the latest interest rates on fixed deposits and Singapore Savings Bonds. 

The latest movements in fixed deposit rates were mixed, with the best 12-month fixed deposit rate raised to 3.58%. However, the best 6-month fixed deposit rate was brought down to 3.4%.

This makes the upcoming 6-month T-bill auction on 14 September look like a relatively attractive option, even as the cut-off yield has fallen to 3.7% in the previous auction. 

Likewise, the interest rates on the latest Singapore Savings Bonds have increased to the highest level this year, with the average 10-year return at 3.16%. 

We’ll be looking out for the upcoming US consumer price index data and Federal Reserve meeting this month to get an indication of where interest rates are headed next. 

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Source: Bloomberg. Price as of market close on 8 September

 

🔺 MORE RATE HIKES TO COME?

What happened? 

Brent crude oil prices closed above $90 per barrel this week after Saudi Arabia and Russia agreed to extend their voluntary oil production cuts through to the end of the year.

At the same time, strong employment data in the US led to concerns that inflation may remain elevated and the Fed will have to keep interest rates higher for longer. 

What does this mean?

Investors will be watching the upcoming US consumer price index (CPI) data on 13 September to understand if the Fed might raise interest rates further at the upcoming meeting on 20 September. 

According to the CME FedWatch Tool, investors have assigned a 92% probability as of 9 September that the Fed will keep interest rates unchanged at its upcoming meeting.

However, the probability of a further rate hike at the next meeting on 1 November has increased to 44% as of 9 September from 28% a month ago.  

Why should I care? 

Higher bond yields have led dampened the sentiment on stocks, with the S&P falling by 1.3% over the past week.

The share price of Singapore REITs has also weakened with higher bond yields. Check out our REIT tool to compare REITs and find the best REIT for your portfolio.

 

💡 THE BIG IMPORTANT STORY

Sembcorp Industries falls 15% from recent highs. Should investors be concerned?

Sembcorp Industries’ share price has fallen close to 15% from its recent high. We analyse what is driving the weakness and if this is an opportunity for investors to buy the dip.

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🚗 WHAT'S MOVING

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

 

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

Source: Bloomberg, SGX 

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