T-bill yield rebounds to 3.06% in first increase since June. Why the bounce?

What happened?

The cut-off yield for the 6-month Singapore T-bill has been falling since June this year. 

It hence isn't a surprise that there has been less discussion about the T-bill in the Beansprout community lately.

Earlier, I shared that we have seen a bounce in Singapore government bond yields in the past week.

Indeed, the cut off yield for the most recent 6-month Singapore T-bill (BS24120V) auction on 10 October rebounded to 3.06%.

In this post, I will look at the most recent 6-month Singapore T-bill allotment result to understand what may be driving the higher yield. 

Stay updated on the next T-bill

Sign up to receive a free email reminder when the next Singapore T-bill auction is open.

Subscription preferences

• Reminder for Tbill

What we learnt from the latest 6-month Singapore T-bill auction

#1 - Demand for the Singapore T-bill increased 

The total applications for the 6-month Singapore T-bill amounted to S$14.9 billion, an increase from S$13.9 billion in the previous auction.

The amount of competitive bids rose from S$12.4 billion in the previous auction to S$13.5 billion.

If you placed a competitive bid below 3.06%, you would receive 100% of your requested T-bill allocation.

For those who bid at exactly 3.06%, the allocation would be around 68%. 

Meanwhile, non-competitive bids decreased slightly to S$1.4 billion from S$1.5 billion in the previous auction. 

Since these bids were within the allocation limit, all eligible non-competitive bids received a full 100% allocation. 

#2 - Issuance size remains unchanged from previous T-bill auction

The amount of T-bills issued remained at S$6.8 billion, the same as the previous auction.

With total applications rising from S$13.9 billion to S$14.9 billion, the ratio of applications to T-bills issued increased from 2.05x to 2.19x.

#3 Median yield of T-bill bids was higher

The median yield of bids came in at 2.9%, slightly up from 2.85% in the previous auction. 

The higher median yield is likely due to the recent increase in government bond yields, as US economic data has been stronger than expected. 

However, the average yield fell slightly to 2.76% from 2.79%. 

Given the median yield and the cut-off yield, it suggests that a substantial number of bids were placed in the 2.9% to 3.06% range, close to the best 3-month and 6-month fixed deposit rates in Singapore. 

What would Beansprout do? 

After several months of steep decline, it may come as a relief to some investors that the Singapore T-bill yield has finally bounced slightly. 

The cut-off yield of 3.06% in the latest auction would be close to the best 3-month and 6-month fixed deposit rates in Singapore. 

It would also be close to the break-even yield for CPF OA applications. If you managed to subscribe to the 6-month T-bill using CPF OA funds, find out how much more interest you can potentially earn compared to the OA interest rate using our CPF T-bill calculator.

While the Singapore T-bill yield has rebounded to above 3%, I would still be looking for ways to allow my savings to earn a higher yield in a relatively safe way.

For example  I would consider money market funds to earn a higher yield compared to the T-bill while also meeting my liquidity needs.  Moomoo Singapore is offering a guaranteed return of 6.8% p.a. for new users who deposit funds into Moomoo Cash Plus. Learn more about the Moomoo Cash Plus promotion here.

I also shared how bond funds allow us to gain exposure to a basket of bonds which may see price appreciation if interest rates come down. 

I would also consider selected high quality Singapore REITs which may offer a higher dividend yield compared to the T-bill yield too.  

The next 6-month T-bill auction on 24 October 2024, and you can set a reminder by signing up for our free email alert. 

If you are new to investing in the T-bill, check out our comprehensive guide to Singapore T-bills to learn more.

Join the Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.