T-bill yield falls further to 1.79%. What's driving the decline?

What happened?

The results for the latest 6-month Singapore T-bill auction are out. 

The cut off yield for the 6-month Singapore T-bill (BS25114N) fell to 1.79% in the auction on 17 July 2025

Earlier, we shared that the yield on the Singapore T-bill has been declining as investors look for safe haven assets to park their cash. 

Despite the fall in yield, the T-bill still remains a popular option for investors to earn passive income in Singapore. 

With the decline in the T-bill yield, I'll share how it compares to the best fixed deposit rates as a place to park your spare cash. 

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

#1 - Demand for the Singapore T-bill declined

The total applications for the 6-month Singapore T-bill decreased to S$15.5 billion in the latest auction on 17 July from S$16.1 billion recorded on 3 July.

This represents a significant decline from the recent peak of S$23.3 billion on 13 February 2025,, as yields have come down by a fair bit in recent months.

In fact, it would mark one of the lowest levels of T-bill applications since the start of the year. 

The amount of competitive bids decreased to S$14.3 billion.

If you placed a competitive bid below 1.79%, you would receive 100% of your requested T-bill allocation.

If you bid at exactly 1.79%, the allocation would be around 44%. 

The amount of non-competitive bids also decreased to S$1.2 billion.

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

The amount of T-bills issued was at $7.6 billion, which was higher than the previous auction of $7.5 billion.

With total applications decreasing from S$16.1  billion in the previous auction to S$15.5 billion in this latest auction, the ratio of applications to T-bills issued (bid-to-cover ratio) decreased from approximately 2.15x to 2.04x.

#3 - Average and median yield of bids submitted fell

The median yield of bids submitted fell further to 1.73% from 1.76% in the previous auction.

The average yield of bids submitted also fell to 1.60% from 1.64% in the previous auction.

The fall in the median and average yield of bids submitted would be consistent with the fall in short term 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 1.73% to 1.79% range, below the best 6-month fixed deposit rate in Singapore. 

What would Beansprout do? 

The drop in the T-bill cut-off yield to 1.79% seems to reflect falling short-term government bond yields, as seen in the lower median and average yield of bids submitted.

Following the  decline in T-bill cut-off yields, yields have now dipped below the best 6-month fixed deposit rate in Singapore of 2.15% p.a. 

They also fall short of the break-even yield for CPF OA applications, based on calculations using our CPF T-bill calculator.

In light of this, I would consider exploring alternative ways to earn passive income in Singapore. Check out our guide comparing T-bills to fixed deposits, savings accounts and Singapore Savings Bonds to find out the best place to park your cash. 

For example, some savings accounts continue to offer an interest rate of above 1.79% p.a, even though banks have been cutting the interest rates in recent months. 

Another popular option amongst investors is money market funds, which aim to provide higher potential returns compared to savings accounts, and greater flexibility compared to fixed deposits. 

If you are looking to invest in a money market fund, you can earn an exclusive $50 Fairprice voucher, a 6% p.a interest boost coupon (worth ~S$30)  + 8% p.a interest boost coupon (worth S$263) with Longbridge Cash Plus when you sign up for a Longbridge account via Beansprout. Learn more about the Longbridge promo here. 

If you are looking to lock in higher interest rates for a longer period of time, the latest Singapore Savings Bonds (SSB)s offer a 10-year average return of 2.29% p.a. 

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