T-bill yield dives to 2.05%. Here's why it has declined

What happened?

The 6-month Singapore T-bill yield has declined further.

At the auction on 5 June 2025, the cut off yield for the 6-month Singapore T-bill (BS25111T) fell to 2.05% from 2.20% in the previous auction.

While we have seen T-bill yields declining in recent weeks, many in the Beansprout community were still surprised by the extent of the fall. 

In this post, I'll explore the latest 6-month Singapore T-bill auction results and what they might mean for investors.

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

#1 -Demand for the Singapore T-bill eased slightly but remains strong

The total applications for the 6-month Singapore T-bill reached S$17.9 billion in the latest auction on 5 June, slightly lower than the S$18.1 billion recorded on 22 May.

While demand remains firm, it has eased slightly from the previous auction and remains below the recent peak of S$23.3 billion on 13 February 2025.

The amount of competitive bids decreased to S$16.4 billion from S$16.6 billion in the previous auction. 

If you placed a competitive bid below 2.05%, you would receive 100% of your requested T-bill allocation.

If you bid at exactly 2.05%, the allocation would be around 44%. 

The amount of non-competitive bids remained the same at S$1.5 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 slightly

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

With total applications decreasing from S$17.9 billion in the previous auction to S$18.1 billion, the ratio of applications to T-bills issued (bid-to-cover ratio) decreased from approximately 2.41x to 2.35x.

#3 - Median yield of bids submitted fell

The median yield of bids submitted fell further to 1.99% from 2.18% in the previous auction.

The average yield of bids submitted also fell to 1.90% from 2.07% 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 1.99% to 2.05% 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 2.05% seems to reflect falling short-term government bond yields, as seen in the lower median yield of bids submitted.

Despite the lower yields in recent auctions, demand for T-bills has remained firm.

Following the  decline in T-bill cut-off yields, yields have now dipped below the best 6-month fixed deposit rate in Singapore of 2.35% 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 grow my savings by earning a higher yield in a relatively safe way.

For example, some savings accounts continue to offer an interest rate of above 2.05% 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. 

Longbridge is currently running a promotion offering a 6% p.a. interest boost coupon for 60 days and a bonus 6% p.a on your first S$2,000. Learn more about how you can also earn welcome rewards including a $50 exclusive voucher 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 2.49% p.a. 

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