1 year T-bill yield falls to 1.35%. What's driving the decline?

What happened?

If you've been eyeing T-bills as a place to park your cash, the latest numbers might be a letdown.

The cut-off yield for the 1-year Singapore T-bill (BY25103W) has dropped to 1.35% in the latest auction on 15 October. 

This follows a trend of declining T-bill yields in the past few months with lower interest rates. 

This latest 1-year T-bill yield is lower compared to the yield of 1.68% in the previous 1-year T-bill auction.

Let us find out what may be driving the decline in the 1-year T-bill yield.

Don't miss out 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 1-year Singapore T-bill auction

#1 – Stronger demand for 1-year T-bill

Total applications for the latest Singapore 1-year T-bill increased to S$13.1 billion, up from S$11.3 billion in the previous 1-year T-bill auction on 24 July.

The amount of non-competitive bids fell slightly to S$362 million from S$477 million in the previous auction.

Since the S$362 million in non-competitive bids fell within the allocation limit, eligible non-competitive bids received a full 100% allocation at a cut-off yield of 1.35%. 

The amount of competitive bids rose to S$12.7 billion from S$10.8 billion in the previous auction.

This runs similar to the demand for the 6-month T-bill in the recent auction on 9 October where applications increased.  

#2 – Lower average and median yield for bids submitted

The average yield of bids submitted fell to 1.16%, down from 1.44% in the July auction.

Similarly, the median yield dropped to 1.20%, from 1.60% previously.

This reflects the sharp decline in short term bond yields we have seen over the past few months, with increasing expectations of potential interest rate cuts by the US Federal Reserve. 

#3 – Cut-off yield lower than breakeven yield for CPF OA applications

The cut-off yield of 1.35% is lower than the breakeven cut-off yield for T-bills applications using CPF OA.

As a recap, the breakeven cut-off yield for T-bill applications using CPF is higher than the current CPF OA rate of 2.5%, due to the potential loss of additional CPF interest when applying for T-bill using CPF savings. 

The latest 1-year T-bill yield of 1.35% is also lower than the best 1-year fixed deposit rate in Singapore of 1.60% p.a.

With the decrease in the 1-year T-bill yield, the gap between the best fixed deposit rate and the T-bill yield has narrowed in the latest auction, as compared to the previous T-bill auction in July 2025. 

What would Beansprout do? 

The decline in cut-off yield for the latest 1-year Singapore T-bill to 1.35% appears to be driven by elevated demand as well as lower yields of bids submitted. 

With the drop in T-bill yields, the cut-off rate is now below the best 1-year fixed deposit rate in Singapore of 1.60% p.a.

The 1-year T-bill yield of 1.35% is also lower than that of the latest 6-month T-bill on 9 October.

As such, we would also start to look for other ways to earn a higher yield on our cash.

One of the ways to secure a potentially higher yield is to consider the Singapore Savings Bonds (SSB), which offers a 1-year return of 1.39% and average annual return of 1.83% over 10 years, while having the flexibility to redeem prior to maturity. 

Also, we were still able to find savings accounts in Singapore that offer an interest rate of above 1.35% p.a. For example, the DBS Multiplier promo allows new Multiplier customers to earn up to 2.5% p.a. on the first S$100,000. 

To compare between fixed deposits, T-bills, savings account and SSBs, check out our guide to the best places to park your cash in October 2025.

[Beansprout Exclusive Longbridge Promotion] Get bonus S$50 FairPrice voucher within 5 days, S$18 cash voucher, plus 2x6% p.a. interest boost on S$2,000 with Longbridge Cash Plus for 90 days (worth up to S$60) when you sign up for a Longbridge account via Beansprout and fund S$2,000. T&Cs apply. Learn more about the Longbridge promotion here. 

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.

Follow us on Telegram, Youtube, Facebook and Instagram to get the latest financial insights.