The cut-off yield on the latest 6-month Singapore T-bill auction on 20 December fell slightly to 3.73%.
Many investors were eagerly anticipating the latest 6-month Singapore T-bill auction result.
After all, global bond yields have declined sharply after the most recent Fed meeting.
For T-bill investors, the good news is that the cut-off yield for the 6-month Singapore T-bill (BS23125H) was at 3.73%, falling only slightly from the previous auction.
Let us dive deeper to find out why the Singapore T-bill yield has remained elevated even as US bond yields have fallen sharply.
What we learnt from the latest Singapore T-bill auction
#1 – T-bill demand fell from previous issuance but remains elevated
The total amount of T-bill applications fell slightly compared to the previous auction.
There were S$12.8 billion of applications for the latest 6-month Singapore T-bill, lower than the S$13.3 billion of applications in the previous auction.
The amount of non-competitive bids fell slightly to S$2.2 billion from S$2.5 billion in the previous auction.
Eligible non-competitive bids were able to get 100% allocation in the latest T-bill auction, as the amount of non-competitive bids was within the allocation limit.
The amount of competitive bids also fell slightly to S$10.6 billion from S$10.8 billion in the previous auction.
However, demand remains elevated with the amount of competitive bids remaining higher than most of the third quarter of this year.
#2 - Median and average yield declined
The median yield of bids submitted fell slightly to 3.58% from 3.60% in the previous auction, reflecting the fall in global bond yields in recent weeks.
The average yield of bids submitted also fell to 2.94% from 3.05% in the previous auction.
#3 - Smaller issuance size compared to the previous issuance
Despite the fall in demand for the T-bills, one of the reasons the cut-off yield did not go up may be because of the smaller T-bill issuance size.
The amount of T-bills issued fell to S$5.6 billion from S$5.9 billion in the previous auction.
With the smaller issuance size and lower median yield of bids submitted, the cut-off yield also declined slightly in the latest auction.
What would Beansprout do?
With some banks starting to cut their fixed deposit rates following Fed’s latest meeting, Singapore T-bill investors may be relieved to see that the yield on the T-bill has not fallen by much.
In fact, the cut-off yield on the latest 6-month T-bill remains higher than the best 6-month fixed deposit rate of 3.65%.
Hence, it would appear that the T-bill remains a safe way to earn a higher return on our savings in the short term.
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.
For those who did not get your intended allotment of the T-bill, you can consider alternatives to park your savings before the next 6-month T-bill auction on 4 January 2024.
Otherwise, you can consider high-yield savings accounts that may allow you to earn a higher interest rate on your savings.
If you would like to secure the high yields over a longer time period, then it might be worth considering Singapore Savings Bonds (SSBs), where the current issuance offers a 10-year average return of 3.07% per year.
Lastly, Syfe Cash+ Guaranteed recently raised the guaranteed return offered to investors to 4.0% per annum. Find out if it is a better option compared to T-bills here.
Use our CPF-Tbill calculator to find out how much more interest you can potentially earn by investing in the Singapore T-bill using your CPF OA savings.
Gain financial insights in minutes
Subscribe to our free weekly newsletter for more insights to grow your wealth