The latest SSB Feb 2025 offering has a slightly higher first-year rate of 2.76% but a lower 10-year average rate of 2.82%. These rates are roughly in line with last month’s offering. Given that we have entered a new rate cut cycle, should we consider this month’s SSB?
SSB Feb 2025 Details
This month’s SSB offering (SBFEB25 GX25020H) is slightly lower than last month’s, but it still offers decent rates: 2.76% for the first year and 2.82% for the 10-year average.
Although recent US inflation data have shown that it is stickier than anticipated, the Fed has been embarking on its rate-cut cycle, with more cuts expected throughout 2025.
If you have yet to fill out your desired SSB allocation, this SSB Feb 2025 can be an option to consider. Please take note of the following application timeline:
Competitiveness
Even though this month’s SSB rates are slightly lower than last month’s, the chart above shows that they are still higher than those of the previous several months.
Looking at the period from late 2022 to 2024, we can see that the rates were much higher back then. However, if we look back to 2021, we can see that today’s rates are still considerably higher.
Because the Fed has started its rate-cut cycle, we can expect rates to continue decreasing in the long term. If you have yet to fill your desired SSB allocation, this SSB Feb 2025 offering may be an option to lock in the higher rates for longer.
Future Rates Projections
Since September 2024, the Fed has trimmed interest rates by a full one percentage point. They also project two additional cuts in 2025.
The market also expects more cuts coming in 2025:
The table shows that the market expects two rate cuts in 2025, which aligns with what the Fed expects from its latest FOMC meeting.
With the long-term interest rates projected to decline further in 2025, we expect SSB rates to decline as well following the pace of the rate cuts.
How about next month’s SSB? Let’s take a hint from the movement of the Singapore government bond market:
Although it is still early, the yield has risen slightly this month. If this trend continues, next month’s SSB may offer slightly higher rates, though the difference may not be material.
What Do We Do?
We utilize SSB to park our short—and medium-term cash because it allows us to lock in these higher rates for much longer while still allowing us to withdraw every month without penalty.
With the expectation of declining rates in the future, we have migrated all of our T-bills into SSB to lock in these higher rates for much longer.
We have been optimizing our SSB allocation over the past two years. Since this month’s SSB does not offer better rates than our current holdings, we will likely not participate this month.
Will you be applying for this month’s SSB? If so, you may follow our step-by-step guide on how to buy SSB.
