Sunday February 08, 2009

Singapore SIBOR rate falls to 0.69% in Jan 2009, lowest since Apr 2004

This article belongs to the Singapore SIBOR rate watch story arc.

At the end of Jan 2009, for the period of 23-30 Jan 2009, the Singapore SIBOR rate fell to 0.69%, the lowest level since Apr 2004, which is even lower than the 0.94% rate reached in Nov 2008. This continues to be good news for borrowers holding on to SIBOR-linked home loans (or SOR-linked home loans, since SOR is a function of SIBOR with bank overheads added in). On the other hand, the same low interest-rate environment means that savers trying to put away some money for a rainy day continue to get, well, to put it more mildly, the short end of the stick.

However, low interest-rate environments do not last forever. And change may be coming. One of the widely-followed indicators of long-term interest rates, the 10-year US Treasury note or TNX, has recently turned around in a remarkable trend reversal, turning up sharply from a low of 2.0% and is now heading for 3.0% and beyond. The effect is even more pronounced on a long-term chart.

This should not be much of a surprise considering how governments everywhere are trying desperately to pump up their respective economies by spending money. That means issuing government bonds. In a weak demand situation. When supply is greater than demand, Economics 101 kicks in. Prices fall. For bonds, that means yields rise - it's an inverse relationship. Watch out for higher rates. This is a Big Thing. Hyperinflation is a distinct possibility if the governments are not too careful with the money-printing thing.

See also :

1. Singapore : Inflation erodes away bank savings
2. Singapore SIBOR rate falls to 1.31%, lowest since Nov 2004
3. Singapore SIBOR rate fell to 1.25% in Apr 2008, lowest since Aug 2004
4. Singapore SIBOR rate falls to 0.94% in Nov 2008, lowest since Jul 2004

(2009-02-08 11:15:42 SGT) [Biz] Permalink

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