Here's why the T-bill yield fell further to 3.75% despite the Fed rate hike



By Beansprout • 03 Aug 2023 • 0 min read

The cut-off yield on the latest 6-month Singapore T-bill auction on 3 August fell further to 3.75%.

t bill auction 3 August result allotment

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What happened?

Many investors were disappointed to see that the cut-off yield on the latest 6-month T-bill auction (BS23115E) on 3 August has fallen further to 3.75%. 

This would represent a fairly significant decline in the T-bill yield from a recent peak of 3.99% on 6 July.

Let’s take a deep dive into what is causing the fall in the yield on the 6-month T-bill. 

Source: MAS


What we learnt from the latest T-bill auction

#1 – Increase in amount of competitive bids

The total amount of applications for the latest T-bill was at S$12.3 billion, a slight increase from S$12.2 billion in the previous auction. 

This was driven by a further increase in competitive bids to S$10.4 billion from S$10.0 billion in the previous auction, representing the highest amount of competitive bids since 25th May.

However, the amount of non-competitive bids fell to S$1.9 billion from S$2.2 billion in the previous auction. 

All eligible non-competitive bids received 100% allocation in this auction. 


#2 – Average yield of bids submitted rose

Despite the lower cut-off yield for the latest T-bill auction, the average and median yields of bids submitted did not see a similar decline.

The median yield was at 3.64%, relatively unchanged from 3.65% in the previous auction.

The average yield rose to 3.17% from 2.88% in the previous auction.

This is inline with the higher US bond yields we saw after the recent rate hike by the US Federal Reserve.  

Looking at the median yield and cut-off yield, it would seem like there were a sizeable amount of bids that were made in the range of 3.64% to 3.75%. 


#3 – T-bill issuance size slightly smaller than the previous auction

Earlier, we noted that the amount of T-bills offered has fallen slightly to S$5.5 billion from S$5.6 billion in the previous auction. 

With the median yield staying about the same, the lower amount of T-bills offered might have also contributed to the lower cut-off yield in the latest auction. 

What would Beansprout do?

From the comparison above, it would seem like the lower cut-off yield of 3.75% in the latest auction is due to a combination of more applications received and lower amount of T-bills offered. 

While investors may be disappointed with the decline in the cut-off yield, it still remains elevated compared to levels seen in recent years.  


To find out how much more interest you can potentially earn by investing in the Singapore T-bill using your CPF Ordinary Account (OA) savings, check out our CPF-Tbill calculator 

The cut-off yield is also above the best 6-month fixed deposit rate of 3.50% currently.

If you were not allocated the T-bill, we can consider alternatives to park our savings while awaiting the next T-bill auction. We shared how cash management accounts can be used to make our idle cash work harder earlier. 

There are also various savings accounts offer an interest rate of close to 3.5% without having to jump through any hoops.  For example, the GXS savings account is offering an interest rate of 3.48% p.a., the CIMB Fast Saver account is offering an interest rate of 3.5% p.a. for new customers, while the Stanchart eSaver account is offering an interest rate of 3.4% p.a.

As a reminder, the next 6 month T-bill auction will be held on 17 August

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