T-bill yield jumps to 4.07%. What’s driving the surge?

By Beansprout • 28 Sep 2023 • 0 min read

The cut-off yield on the latest 6-month Singapore T-bill on 28 September rose to 4.07%.

Singapore t-bill auction 28 sep 2023

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What happened?

The cut-off yield on the latest 6-month Singapore T-bill auction (BS23119H) on 28 September 2023 has risen to 4.07%.

Source: MAS


This is a sharp increase from the cut-off yield of 3.73% in the previous auction on 14 September. It also marks the highest cut-off yield for the 6-month Singapore T-bill since early this year, when it reached 4.20% on 5th January 2023. 

Source: MAS


Let us find out what are some of the reasons driving the higher yield on the 6-month Singapore T-bill. 

What we learnt from the latest Singapore T-bill auction

#1 – Demand for T-bills fell sharply

The total amount of applications for the latest T-bill was at S$9.3 billion, a decline from S$11.2 billion in the previous auction.

The bulk of decline was driven by a sharp fall in the amount of competitive bids.

There were just S$7.5 billion of competitive bids in the latest 6-month T-bill auction, representing the lowest level of competitive bids this year. 

In fact, the amount of competitive bids is even lower than the auction on 8 December 2022 when the cut-off yield jumped to 4.4% with few applications during the year-end holiday season.

The amount of non-competitive bids rose slightly from the previous auction to reach S$1.8 billion. As this is below the allocation limit for non-competitive bids, all eligible non-competitive bids received full allocation of the T-bill.

6-month singapore t-bill application 28 sep 2023

#2 – Loss of additional CPF interest likely led to lower applications

The lower amount of applications is likely due to lower CPF applications as the latest issuance will lead to a loss of eight months of CPF interest  (i.e. two additional months of CPF interest loss)

Earlier this year when the auction on 30th March also led to a loss of eight months of CPF interest, we similarly saw a decline in the amount of T-bill applications and a jump in the cut-off yield

#3 – Slightly higher yields submitted for competitive bids

The median and average yield of bids submitted for the 6-month T-bill was higher compared to the previous auction.

Part of this increase could be driven by the increase in US bond yields in recent weeks, after the Fed signaled that interest rates may stay higher for longer

The median yield of bids submitted rose to 3.62% from 3.58% in the previous auction.

The average yield of bids submitted jumped to 3.51% from 3.05% in the previous auction. 

6-month singapore t-bill yield 28 sep 2023

What would Beansprout do?

It appears that the higher cut-off yield of 4.07% in the latest 6-month T-bill auction is due to lower amount of applications with the loss of additional CPF interest. 

The higher US bond yields has also led to an increase in the yield on the Singapore T-bill, as reflected in the higher median yield of bids submitted. 

Once again, we see that the move up in the median yield is inline with the rise in the best 12-month fixed deposit rate this month. 

Investors seem to have taken reference to the best 12-month fixed deposit rate of 3.60% in submitting their bids, which coincides with the median yield in the auction. 

For now, the T-bill still offers a better return compared to fixed deposits. However, it remains to be seen if the big jump in cut-off yield can be sustained when CPF applications are normalised in the next auction.

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 6-month T-bill, you can consider alternatives to park your savings before the next 6-month T-bill auction on 12 October 2023

As some in the Beansprout community also pointed out, there is also an upcoming 1-year T-bill auction on 19 October. 

Recently, more investors have been looking at cash management accounts to earn a potentially higher yield. 

Otherwise, you can consider high-yield savings accounts that may allow you to earn a higher interest rate on your savings. 

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

Make your CPF savings work harder

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.

Calculate now

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