New month, same question: Should I rollover any older SSB issuances for the latest one? A key consideration is whether next month’s bond for Mar SSB will offer higher or lower yield. Only a few more days to decide, with applications for Feb SSB closing at 9pm on 26 Jan 2023.
Singapore Government Securities (SGS) 10-year bond yields, of which Singapore Savings Bond (SSB) yields are based upon, have reversed back to the downside after hitting ~3.1% yield at the start of the year and is currently trending ~2.85%
With the latest US CPI figure for Dec 2022 fell -0.1% MoM, with headline inflation coming in at 6.5% YoY, and meeting market expectations. Next FOMC meeting is coming up on 1 Feb 2023, with the market expecting almost unanimously that the Fed will slow rate hike to the standard 25 bps to 4.5-4.75%.
Since Mar 2023 SSB yield will be based on the average daily 10Y SGS yield for the month of Jan 2023, we can start to make a calculated guess about what next month’s SSB yield with only 5 more business days left in the month. Currently up till today (24 Jan), the average daily 10Y SGS yield seems to have stabilised around 2.85%. Assuming SGS bond yields stay roughly around this level, the next SSB should yield around 2.88-2.90%.
If you want to lock in the higher yield of 2.97% for Feb SSB for the next 10 years, make sure you apply by 9pm on 26 Jan 2023.
Personally, since Mar SSB yield will likely be lower, I’ll probably be applying for $13k worth of Feb SSB. Depending on how much I’m allotted, I’ll redeem the equivalent in Sep SSB which are yielding 2.80% only. Despite the yield being below 3%, I think longer term yields are on the way down with recession looking more and more likely in the near term.
I’ve also compiled some stats and charts from MAS website on my SSB tracker.
With most of my SSB tranches optimised except for Sep 2022 issue, I’m starting to look into shorter tenured instruments to maximise yield on my idle cash.
Read also my post on How I Manage My Cash Between SSB, T-Bills, Fixed Deposits and Cash Funds.
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