Will the T-bill yield rise further in the auction on 16 Jan?

What happened?

Many investors seem to be looking at the Singapore T-bill once again. 

I have seen more discussion in the Beansprout community on T-bill, including questions about the expected yield for the upcoming 6-month Singapore T-bill auction (BS25101F) on 16 January 2025.

This may be because we have seen a rebound in the yield on the previous 6-month T-bill auction to 3.05%, 

At the same time, US government bond yields have continued to rise in recent weeks. 

In this post, I will be looking at the latest indicators to find out if it might still be worthwhile applying for the upcoming Singapore T-bill.

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Will the Singapore T-bill yield rise further in the auction on 16 Jan?

#1 – US bond yields have risen

US government bond yields have risen sharply in the past few weeks. 

The 10-year US government bond yield has risen to close to 4.7% from below 4.2% in early December 2024. 

This was supported by strong US employment data, which led investors to expect the Fed to slow down its pace of interest rate cuts. 

However, we have not seen as significant a bounce in yields for bonds with shorter maturities. 

The 1-year US government bond yield has stayed at around the 4.2% level in the past two weeks. 

#2 – Closing yield on 6-month Singapore T-bill has been stable

We have seen a similar trend in Singapore government bond yields, where the yield on shorter maturity bonds has not gone up as much as longer maturity bonds. 

The Singapore 10-year government bond yield has increased from 2.86% at the end of December 2024 to 3.03% currently.

However, the closing yield on the 6-month T-bill was 3.03% on 10 January, close to the cut-off yield of 3.05% in the previous T-bill auction on 2 January.

The yield on the 3-month MAS bill can also give an indication of the yields for shorter-maturity Singapore government bonds.

The cut-off yield was at 3.19% in the auction on 7 January, similar to the cut-off yield of 3.19% in the auction on 24 December. 

#3 – Slightly larger issuance size compared to the previous auction

The issuance size of the upcoming 6-month Singapore T-bill is $7.2 billion, higher than S$6.9 billion in the previous auction. 

This would also represent the largest amount of 6-month T-bills being auctioned. 

We saw a decline in the amount of T-bill applications to S$13.7 billion in the auction on 2 January from S$15.8 billion in the auction on 19 December 2024. 

If demand for the T-bill continues to decline, the larger issuance size of the upcoming T-bill may help to support the T-bill yield. 

What would Beansprout do? 

The closing yield on the 6-month Singapore T-bill was at 3.03% on 10 January, close to the cut-off yield in the previous auction.

This is because the yield on shorter maturity bonds has not gone up by much compared to longer maturity bonds. 

The closing yield on the 6-month Singapore T-bill yield would be above the best 6-month fixed deposit rate of 2.75% p.a., as banks have cut their interest rates in January 2025. 

However, the yield on the 6-month Singapore T-bill would be below some of the interest rates offered by no-frills savings accounts. You can compare the yield for T-bills with fixed deposits and savings accounts here to find out where is the best place to park your savings. 

For CPF investors, the closing yield is also above the breakeven cut-off yield for CPF-OA funds. 

You can find out how much more interest you can potentially earn on the Singapore T-bill using our CPF-T-bill calculator.

The 6-month Singapore auction will be held on 16 January. We would need to put in our cash applications for the T-bills by 9 pm on 15 January (Wednesday).

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Applications for the T-bills using CPF-OA will close 1-2 business days before the auction date, and the dates differ across the three local banks.

• Applications for T-bills online using CPF OA via DBS close at 9pm on 15 Jan (Wed). Read our step-by-step guide to applying via DBS.
• Application for T-bills online using CPF OA via OCBC close at 9pm on 15 Jan (Wed). Read our step-by-step guide to applying via OCBC
• Applications for T-bills online using CPF OA via UOB close at 9pm on 14 Jan (Tue). Read our step-by-step guide to applying via UOB. 

If you are new to investing in the T-bill, check out our comprehensive guide to Singapore T-bills to learn more.

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