T-bill yield falls to 1.39%. What's driving the decline?

What happened?

The results of the first Singapore 6-month T-bill auction of 2026 are out.

In the auction on 15 January, the cut off yield for the 6-month Singapore T-bill (BS26101E) fell to 1.39%.

This represents a fairly significant decline from the yield of 1.6% in the previous auction on 31 December, as well as the yield of 1.48% in the auction on 18 December. 

In this article, I'll look at what is driving the decline in T-bill yield, as well as how it compares to the best fixed deposit rates as a place to park your cash to earn a higher yield. 

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

#1 - Demand for the Singapore T-bill rose sharply

Total applications for the 6-month Singapore T-bill rose to S$19.2 billion in the latest auction on 15 January from S$14.8 billion on 31 December. 

This would also represent the highest amount the 6-month T-bill applications in recent auctions. 

The amount of competitive bids rose to S$17.4 billion on 15 January from S$13.5 billion two weeks ago.

If you placed a competitive bid below 1.39%, you would receive 100% of your requested T-bill allocation.

If you bid at exactly 1.39%, the allocation would be around 17%.

The amount of non-competitive bids rose to S$1.8 billion on 15 January from S$1.3 billion on 31 December.

Since the amount of non-competitive bids was within the allocation limit, all eligible non-competitive bids received full allocation for the T-bill. 

#2 - T-bills issued increased slightly

The amount of T-bills issued was $7.9 billion, slightly higher the previous auction on 31 December at S$7.8 billion.

With the surge in the applications of the T-bills, the ratio of applications to T-bills issued (bid-to-cover ratio) increased to 2.42x. 

#3 - Median and average yield of bids submitted fell

The median yield of bids submitted fell to 1.35% from 1.48% in the previous auction. 

The average yield of bids submitted also decreased to 1.19% from 1.37% in the previous auction. 

This would be inline with the bounce in government bond yields we have seen in recent weeks. 

Given the median yield and the cut-off yield, this suggests that a substantial number of bids were placed in the 1.35% to 1.39% range, which is lower than the best 6-month fixed deposit rate in Singapore. 

Also, the significantly lower average yield of T-bill bids submitted suggests that there were a sizeable amount of applications that were made at a fairly low yield. 

What would Beansprout do?  

The fall in the T-bill yield appears to be driven by the significant increase in demand for the Singapore T-bill.

At the same time, the median yield of bids submitted has also decreased with the fall in Singapore bond yields in the past week.

With this fall in the cut-off yield on the T-bill, we would be looking for other ways to earn a higher yield on our cash.

For example, the best 6-month fixed deposit rate in Singapore of 1.45% p.a. is above the cut-off yield of the latest T-bill.

One other option to consider the Singapore Savings Bonds (SSB), which offers a 1-year return of 1.35% and average annual return of 2.25% over 10 years, while having the flexibility to redeem prior to maturity. 

We were also able to find savings accounts in Singapore that offer an interest rate of above 1.39% p.a. 

To compare between fixed deposits, T-bills, savings account and SSBs, check out our guide to the best places to park your cash in January 2026.

To find out other ways to make your savings work hard, check out our guide to best ways to earn a passive income in Singapore.

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