Account Info
Log Out
English
Back
Download
Log in to access Online Inquiry
Back to the Top
Collect yields: Bond yield reaches 15-year high
Views 479K Contents 125
avatar
doctorpot1 joined discussion · Oct 10, 2022 06:46

Great to lock in high interest rate on long term bond

I'm doubtful that we will remain in a high interest rate environment for a very long time. Even the fed dot plot shows that interest rate will drop in the long term. So I'm eyeing out for safe long term high interest government backed bond to lock in the high yield now.
If we look at Singapore 10 years Savings Bond (SSB) that is issued by the Singapore government we can see that the yield of the bond had increased significantly. Precovid most SSB gives us 1.X% yield, but the latest SSB is giving us 3.X% yield. Almost twice as much.
Great to lock in high interest rate on long term bond
Great to lock in high interest rate on long term bond
One thing is for sure, when interest rate starts to drop, we will be getting back to the 1.X% yield again. So I'm interested to start buying long term government bond now, to lock in the high interest rate, for a long period of time. This way, in the future when everyone is getting 1.X% from their SSB, I'm getting 3.X% instead
Temasek backed bond such as $Astrea7A1 4.125%320527# (V7AB.SG)$ is now giving >4% yield.
Another thing to note is that existing bond price will drop when interest rate rises, but it will rise when interest rate drops. Currently, existing lower yield bond are seeing price drop, so that the net yield of the existing bond will be about the same as the newer higher yield bonds. That is because who would want to buy at 3% yield bond when they can get a better 4% yield bond, so the 3% bond will have to give discount.
For example, my $Astrea VI3%B310318# (6AZB.SG)$ bond is now priced at $0.936, a 6.4% discount So overall the yield is closer to 4% (*simplified as the yield is a step up yield). The good news is if interest rate starts to drop, then the bond price will start rising back up. So I'm kind of considering buy more.
Hope that there will be a release of a 50 year SGS bond with a yield greater than 4% Lock in for 50 years, is like having my own CPF SA that is paying me CPF life (coupon payment) immediately liao hahahahahaha
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more
8
+0
6
Translate
Report
24K Views
Comment
Sign in to post a comment
avatar
doctorpot1
Moo Contributor
crawled out of poverty, working towards FIRE!! (financial independence, retired early)
15KFollowers
109Following
17KVisitors
Follow