T-bill yield rises further to 1.6%. What's driving the bounce?

What happened?

The results of the last Singapore T-bill auction of 2025 are out.

In the auction on 31 December, the cut off yield for the 6-month Singapore T-bill (BS26100A) increased to 1.60%.

This represents a consecutive increase after the cut off yield rose to 1.48% in the previous 6-month Singapore T-bill (BS25125Z) auction on 18 December. 

In this article, I'll look at what is driving the increase in T-bill yield, as well as how it compares to the best fixed deposit rates as a place to park your cash to earn a higher yield. 

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

#1 - Demand for the Singapore T-bill fell slightly

Total applications for the 6-month Singapore T-bill fell to S$14.8 billion in the latest auction on 31 December from S$14.9 billion on 18 December. 

The amount of competitive bids remained at S$13.5 billion. 

If you placed a competitive bid below 1.60%, you would receive 100% of your requested T-bill allocation.

If you bid at exactly 1.60%, the allocation would be around 91%.

The amount of non-competitive bids fell to S$1.3 billion on 31 December from S$1.4 billion on 18 December.

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 decreased slightly

The amount of T-bills issued was $7.8 billion, which was slightly lower than the previous auction on 4 December at S$7.9 billion.

With the lower amount of T-bill issued, the ratio of applications to T-bills issued (bid-to-cover ratio) increased to 1.90x. 

#3 - Median and average yield of bids submitted rose

The median yield of bids submitted rose to 1.48% from 1.37% in the previous auction. 

The average yield of bids submitted also increased to 1.37% from 1.27% in the previous auction. 

This would be inline with the bounce in government 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 1.48% to 1.60% range, which is higher than the best 6-month fixed deposit rate in Singapore. 

What would Beansprout do?  

The significant bounce in the T-bill yield is likely driven by the fall in demand for the Singapore T-bill.

At the same time, the median yield of bids submitted has also increased with the rise in global bond yields in the past week.

With this rebound in the cut-off yield on the T-bill, it is now above the best 6-month fixed deposit rate in Singapore.

It would also be generally higher than the interest rate offered by the best no-frills savings accounts in Singapore.

We compare the interest rates offered by T-bills, fixed deposits, savings accounts and money market funds 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.

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