“Walk FIRE enter demon?” SSB, T-bill, “Fed up.”

The Fed has spoken and does Mr. Market like it?

Well, to be clear, interest rates are not going down anytime soon.

In fact, interest rates will be going higher albeit at a slower pace.

Indeed, another 0.5% hike is expected this month and we could see another 0.5% in 1Q 2023.

However, in the near term, there is some celebration.

It is like being in a COVID 19 lockdown for too long and there is just so much pent up energy waiting to break free.

Human beings are like that.

Anyway, it seems that yields are all softer in the near term and we see this in the latest Singapore Savings Bond offer.






3.26% on 10 year average yield.

This is lower than the 3.47% pa before.

In case some think it is not a big deal, it is a pretty big deal when we realize it is more than 6% lower.

If our boss tells us we are getting a 6% pay cut, I am sure we won’t be happy.

Yes, for the gainfully unemployed like me, interest income is part of our income!

For most people who are unemployed, interest income could be their major source of income.

It is true that it is passive income and not earned income but it is income.

Still, I will be applying for this Singapore Savings Bond as the 10 year average yield remains above 3% which is what I need to see in order to park my funds originally meant for CPF voluntary contribution in the new year.

$14,000 is all that remains to be deployed and with the a lower 10 year average yield, I am hopeful that I will get full allotment.




Of course, it is hard to say what Mr. Market might do.

Those who applied for more mostly got $14,000 allotment for the 3.47% pa Singapore Savings Bond but they mostly got only $10,000 allotment for the 3.21% pa one before that.

Alamak.

Higher yield, people less interested.

Lower yield, people more interested.

I am confused.

How do you like that?

Anyway, for those who are interested like I am, remember to apply by 27 Dec 22.




What about the 6 months T-bill auction?

We will have to submit a bid by 8 Dec 22 if we are still interested in it.

AK doesn’t sound too interested, does he?

You so clever to think so.

I think we can take a hint from the lower yield offered by the Singapore Savings Bond that the yield on the upcoming 6 months T-bill is probably going to be lower.

Of course, I could be wrong.

After all, my hopes for higher yields from the 6 months T-bills last month were dashed although the Singapore Savings Bond last month offered a higher 10 year average yield.

With people using their CPF OA money to chase higher returns from T-bills and with their opportunity cost so high compared to people using cash on hand, I expect yields for 6 months T-bill to soften further.

This is made more likely with more latecomers joining the bandwagon.





So, what do I think the yield for the next 6 months T-bill might be?

3.8% pa smelly smelly or lower if the pong gets really intense.

As long as the CPF OA interest rate stays at 2.5% pa, the 6 months T-bill could see yield trending lower as even 3.5% pa still makes sense.

Although it might seem stupid and irrational to some that these people bid very low in order to get full allotment, it really is quite rational.

It is very natural human behavior.

I could join the “madness” but the thought of having to get behind a long line at the bank is too off putting.

Anyway, for those using non-CPF money like me, we can get higher returns from fixed deposits now.

With interest rates still on an upward trajectory, I expect fixed deposit rates to stay firm and eventually rise in tandem.





There is talk of interest rates possibly reducing in 2H 2023 or in 2024 because the world is probably going into a recession.

What does AK think?

I think I will believe it when I see it.

Crystal ball gazing is all very interesting to some people but I find it pretty boring because all I see is the crystal ball most of the time.

Well, when I am hallucinating, I might see something else.

For now, staying invested in income producing assets and having a meaningful fixed income component in my portfolio is still the strategy.

The strategy is boring and has not changed in years.

Yes, it doesn’t make me rich quick like going big into cryptocurrencies has for some people but it is a sound and grounded strategy that is time tested.





Those who made a lot of money in some more questionable cryptocurrencies and got out early must realize that they got lucky in a Ponzi scheme.

They might not be so lucky next time.

Most people crashed and burned because that is how Ponzi schemes work.

OK, the last few sentences just happened spontaneously.

Didn’t plan to say anything like this as all I wanted to blog about was the upcoming Singapore Savings Bond and T-bills.

Alamak, getting old and nagging too much.

OK, I will stop.

Recently published:
1. 4% on 6 months fixed deposit.
2. 50% don’t have enough savings.
Achieving FIRE is not impossible.
See: 59% want to achieve FOUR
Just don’t “walk fire, enter demon.”




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