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Anonymous
And you must put in $ into T-bill without knowing the interest % yield yet is it?
thanks!!
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Yes SSB is more liquid and last for 10 years. What will happen after 1 year later? Will the interest reduce?
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It voice down to trending. Although it is true that T-bill rate is unknown until after the auction whilst SSB is made known at point of application, we can basically observe the trending of both cases and make a good guess out of it especially when supported by event unfolding such as FED's strong advocate of continued rate hikes in the months ahead. Back by these information, it then voice down to personal analysis. In this case, I would analyse that T-bill will generally offer higher rate than SSB. And given that T-bills are auctioned more regularly compares to SSB, I expect a relatively higher T-bill rate each time for the next few months. This way, I am building up the interest rates progressively with only short tenured of 6 month each time.
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Because after 6 months, interest rate may drop to 2%.
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Javier Tan Yan Kai
04 Oct 2022
Actuarial Analyst at AIA
Liquidity and certainty over rate and longer term known rate may appeal to some...
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Although SSB duration is 10 years but investors can freely redeem and get paid in the second business day of the following month. T-bill cannot be redeemed before maturity.