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

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. 

🔺 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?

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🚗 WHAT'S MOVING

• Digital Core REIT announced that it will be included in the FTSE EPRA Nareit Global Developed Index on 15 September. Separately, the REIT also announced several management changes. Click here for Digital Core REIT share price and analysis.
• Mapletree Logistics Trust has proposed to divest Moriya Centre in Japan for 10.03 billion yen (S$95.5 million), 12% above the property’s latest valuation. The divestment is expected to be completed in the third quarter of its fiscal year. Click here for Mapletree Logistics Trust share price and analysis.
• WeWork has started a process of engagement with landlords to renegotiate nearly all of its leases. Read our earlier analysis on how WeWork’s woes could impact Singapore office REITs here.
• PTT Exploration & Production Thai SDR’s share price rose after oil prices soared with the extension of voluntary oil production cuts by Russia and Saudi Arabia. Read our analysis on how the policies of the new Thai Government could impact Thai blue chip companies. 
• Apple’s share price fell after Bloomberg reported that China is planning to extend a ban on iPhone use to state-owned corporations. Earlier, the Wall Street Journal reported that China was moving to prohibit iPhone usage in government agencies. Click here for Apple share price and analysis.

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

🤓 WHAT WE’RE LOOKING OUT FOR THIS WEEK

• Tuesday, 12 Sep: SGX Academy Webinar: Are Thai blue chips worth a relook?, Apple’s 2023 Annual Event
• Wednesday, 13 Sep: Ask SIAS webinar, US Consumer Price Index data
• Thursday, 14 Sep: Singapore 6-month T-bill auction, US Retail Sales data, China Industrial Production data
• Friday, 15 Sep: US University of Michigan Consumer Sentiment data

Source: Bloomberg, SGX 

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