We finally got the details of this SSB Oct 2024 offering: 2.59% for the first-year rate and 2.77% for the 10-year average. Unfortunately, these rates are much lower than last month’s offering, which still yielded more than 3%. Let’s look into this SSB in more detail.
SSB Oct 2024 Details
The first-year rate is 2.59%, and the 10-year average is 2.77%. Okay, yeah, these rates are kind of disappointing compared to last month’s offering. Most of us will likely have reached our desired SSB allocation throughout 2023 and 2024. However, if you have not filled your desired allocation yet, given that rates are expected to decline further, this month’s SSB can be an option to consider to lock in the rates for the next ten years.
If you are interested in applying for this month’s SSB, please do so before 25 Sep 2024. Here is the complete application timeline:
How Competitive Is This Month’s Offering?
Yeah, it’s disappointing. But let’s not get too negative, and let’s look into the historical SSB rates to see where we are now:
The chart shows SSB interest rates from early 2021 until today. The rates for SSB Oct 2024 are at the lower end of the range we have observed since late 2022. However, despite being lower, they are still among the highest in recent years. Back in 2021 and 2022, we still saw sub-1% interest rates. That’s how fast interest rates have climbed in recent years!
How About Future SSB Offerings?
Unfortunately, barring any black swan event, we will likely see lower rates in the coming months. The Fed Chairman, Jerome Powell, has given his clearest signal that a rate cut is coming soon. It’s just a matter of how fast it is going to be.
Because SSB rates track the 10-year bond yield, they are likely to be affected by these incoming rate cuts. Here is the market expectation for future rates:
The market expects an interest rate cut at 100% probability this September. It expects a 69% probability of a 0.25% rate cut and a 31% probability of a 0.5% rate cut. Furthermore, the market expects a full basis point rate cut by the end of the year, with more cuts in 2025!
Given the bias toward rate cuts in the coming months, it seems that the earlier you lock in the rates, the higher the probability you can get higher rates. If you are yet to fulfill your desired SSB allocation, you may consider this month’s offering while the relatively higher rates are still available.
What Would We Do?
If you had followed us, you would have known that we have been busy migrating our short-term cash allocation from T-bills into SSB to lock in these higher rates for much longer.
Because we have migrated our desired short-term cash allocation into SSB, we will not participate in this month’s offering as it yields much lower than the previous months.
Will you be applying for this month’s SSB? If so, you may follow our step-by-step guide on how to buy SSB.
