Singapore Savings Bonds

[reddevil0728]

For interest rate in Sg, I'm referring to Daily SGS Prices
https://eservices.mas.gov.sg/Statistics/fdanet/SgsBenchmarkIssuePrices.aspx

It has been falling, almost across the various years, over almost the past 1 month.

What controls Sg rate if it is not influenced by fed?

market forces

 

[Intel888]

market forces

That's what I'm trying to understand. Lol.

 

[sglandscape]

That's what I'm trying to understand. Lol.

Driven by the 10y rate in the US coming down, as market believes the Fed would be forced to cut soon. The 10y rate is average of short term rates and long term inflation expectation. Rate hike at most impact the short end, but the implied pricing has priced in faster rate cuts thereafter.

For SG it tracks the US rate movements, and also impacted by MAS monetary policy. SG rates would have been lower if MAS allowed SGD to appreciate faster, but they did not in the recent policy announcement.

 

[Nofear40]

The SORA rate seems to be going the opposite direction?

 

[reddevil0728]

The SORA rate seems to be going the opposite direction?

opposite from?

 

[Nofear40]

opposite from?

Opposite from all the savings rates…
I am now in a situation that my loan rate keep increasing and savings rate keep dropping

 

[reddevil0728]

Opposite from all the savings rates…
I am now in a situation that my loan rate keep increasing and savings rate keep dropping

cause loan rate has to be ahead of saving rate 1 what. if not how banks make money

 

[Intel888]

Driven by the 10y rate in the US coming down, as market believes the Fed would be forced to cut soon. The 10y rate is average of short term rates and long term inflation expectation. Rate hike at most impact the short end, but the implied pricing has priced in faster rate cuts thereafter.

For SG it tracks the US rate movements, and also impacted by MAS monetary policy. SG rates would have been lower if MAS allowed SGD to appreciate faster, but they did not in the recent policy announcement.

Thanks.

Trying to understand this tango/ chacha dance of the various market forces, so that I can deploy my bullets accordingly for short, medium, long term.

 

[sglandscape]

Thanks.

Trying to understand this tango/ chacha dance of the various market forces, so that I can deploy my bullets accordingly for short, medium, long term.

Tldr, don't wait, so it soon if its in SGD deployment. Lock in longer term too if fits your life stage

 

[Intel888]

Tldr, don't wait, so it soon if its in SGD deployment. Lock in longer term too if fits your life stage

Just locked in some May SSB for middle term.

The longest SSB I've held was for around 5 years.
Currently don't quite see SSB as a long term (10 yr) investment, yet.
But of course, depending on market conditions, may just keep the SSB if there are no better alternatives in the future.

 

[touchring1]

https://www.mas.gov.sg/bonds-and-bi...ond?issue_code=GX23050W&issue_date=2023-05-02
Surprise with the result, no over ballotting?

For SG it tracks the US rate movements, and also impacted by MAS monetary policy. SG rates would have been lower if MAS allowed SGD to appreciate faster, but they did not in the recent policy announcement.

Shouldn't it be the opposite? If MAS allowed SG rates to be lower, SGD will fall against the USD.

 

[hwckhs]

Projection by https://www.ilovessb.com/projection/SBJUN23 , as of 28/4/2023:

SBJUN23

Year from issue date	1	2	3	4	5	6	7	8	9	10
Interest %	2.81	2.81	2.81	2.81	2.81	2.82	2.82	2.82	2.82	2.82
Average return per year %	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81	2.81

Based on SGS benchmark yields (Apr 2023):
1 year: 3.67
2 year: 3.02
5 year: 2.84
10 year: 2.81

 

[BBCWatcher]

Shouldn't it be the opposite? If MAS allowed SG rates to be lower, SGD will fall against the USD.

Would that be a bad thing? If the Singapore dollar falls in value relative to the U.S. dollar then that'd mean Singapore's exports (its goods and services) to the United States and to other U.S. dollarized countries would be that much more competitive. And if Singapore's exporters do better then their employees should do better, too.

 

[fr33d0m]

Would that be a bad thing? If the Singapore dollar falls in value relative to the U.S. dollar then that'd mean Singapore's exports (its goods and services) to the United States and to other U.S. dollarized countries would be that much more competitive. And if Singapore's exporters do better then their employees should do better, too.

Enjoy the high inflation…..

 

[touchring1]

Would that be a bad thing? If the Singapore dollar falls in value relative to the U.S. dollar then that'd mean Singapore's exports (its goods and services) to the United States and to other U.S. dollarized countries would be that much more competitive. And if Singapore's exporters do better then their employees should do better, too.

Logically speaking that should be the case, but while SGD is rising against USD, it is falling against other currencies which is bad news because if our SGD interest rates are over 4% and SGD is still weak, what will happen if we cut rates? The Singapore government now is trying to attract funds from China, a weak SGD doesn't give confidence.

 

[BBCWatcher]

Enjoy the high inflation…..

Or enjoy the unemployment?

Would you acknowledge that it's possible for the Singapore dollar to be too strong?

 

[fr33d0m]

Or enjoy the unemployment?

Would you acknowledge that it's possible for the Singapore dollar to be too strong?

with the amount of money coming into Singapore, it may not be

 

[sglandscape]

https://www.mas.gov.sg/bonds-and-bi...ond?issue_code=GX23050W&issue_date=2023-05-02
Surprise with the result, no over ballotting?



Shouldn't it be the opposite? If MAS allowed SG rates to be lower, SGD will fall against the USD.

You may have gotten the order wrong, MAS manages the FX rates and the interest rates is a consequence, since that's the monetary stance taken.

So if SGD is stronger, SGD rates would be lower since the Fx gains would compensate for some of the returns VS fair value in USD.

If MAS manages the rates locally, capital inflows would require MAS to mop up a lot of these demand for SGD, to keep rates high and comparable to USD, if you may see major capital outflows if left unchecked (as rates decline, and money supply increase and drive inflation) by the non flight to safety flows. So it's really a balancing act.

 

[touchring1]

You may have gotten the order wrong, MAS manages the FX rates and the interest rates is a consequence, since that's the monetary stance taken.

So if SGD is stronger, SGD rates would be lower since the Fx gains would compensate for some of the returns VS fair value in USD.

Sounds reasonable also.

If MAS manages the rates locally, capital inflows would require MAS to mop up a lot of these demand for SGD, to keep rates high and comparable to USD, if you may see major capital outflows if left unchecked (as rates decline, and money supply increase and drive inflation) by the non flight to safety flows. So it's really a balancing act.

Not sure if I understood the above, if you could rephrase it will be good.

I pose the question to ChatGPT. The answer isn't clear.

Q: If MAS allowed SG rates to be lower, SGD will fall against the USD.​

​

A: MAS stands for Monetary Authority of Singapore, which is Singapore's central bank. SG rates refer to the interest rates in Singapore. If the MAS were to allow SG rates to be lower, it could potentially lead to a decrease in the demand for SGD, as investors may seek higher yields in other currencies. This could lead to a decrease in the value of SGD against USD, as there would be less demand for SGD in the foreign exchange market.​

However, it is important to note that exchange rates are determined by a variety of factors, including but not limited to interest rates. Other factors that could impact the value of SGD against USD include economic growth, inflation rates, political stability, and global economic conditions. Therefore, it is not certain that a decrease in SG rates would lead to a corresponding decrease in the value of SGD against USD.​

 

[touchring1]

Or enjoy the unemployment?

Would you acknowledge that it's possible for the Singapore dollar to be too strong?

The Singapore dollar is too strong.

A large part of our domestic employment isn't real, just foreign multinationals parking their business units staffed with mostly foreign staff due to our lax financial, environmental, labour regulations and ready infrastructure. As the infrastructure of India, Malaysia and Indonesia improves, office rental, expat rental and cost of living soar, they will be moving those business units out. In fact, some are already shifting to Malaysia and Indonesia. With wfh culture, VPN, Teams and WhatsApp, there's actually no need for an office here. The team can be in Malaysia or Jakarta and have 3 or 4 times a year meeting in Singapore for team bonding.

The issue with SSB is it is in SGD. If SGD depreciates, the value of SSB will decline.