The yield on the upcoming 6-month Singapore T-bill may be supported by a significantly larger issuance size.
Many Singapore T-bill investors are wondering if the T-bill yield will remain high.
Let’s find out what the latest indicators are telling us about the potential yield for the T-bill auction, and if it is worthwhile applying for the T-bill.
Will the Singapore T-bill yield rise with a spike in issuance size?
#1 – Rebound in US government bond yields short-lived
US government bond yields bounced slightly as we entered 2024, reversing some of the sharp decline we saw since November last year.
At one point, the US 10-year government bond yield climbed to above 4% once again.
However, the bounce in bond yields proved to be short-lived, as the US 10-year government bond yield has fallen to below 4% once again.
As of 12 January 2024, the US 10-year government bond yield is at 3.93%, close to where it was at the end of 2023.
#2 – Singapore T-bill closing yield has been stable
Closer to home, Singapore government bond yields have been fairly stable in the past week.
The closing yield on the 10-year Singapore government bond was at 2.81% on 12 January, unchanged from 5 January.
The closing yield on the 6-month Singapore T-bill was at 3.75% on 12 January, similarly unchanged from 5 January.
Some investors may also be tracking the 3-month MAS note closely to get an indication of shorter maturity Singapore government bonds.
The cut-off yield on the 3-month MAS note was at 4.04% on 9 January, also relatively unchanged from the cut-off yield of 4.05% on 3 January.
#3 – Significantly larger issuance size may also support Singapore T-bill yield
One thing that caught our eye for the upcoming 6-month Singapore T-bill auction is the significantly larger issuance size of S$6.4 billion.
In the previous 6-month Singapore T-bill auction on 4 January, the issuance size was at S$6.1 billion.
Looking back to the 6-month Singapore T-bill auction one year ago on 18 January 2023, the issuance size was just S$5.0 billion.
A larger amount of T-bills on auction has helped to drive a higher cut-off yield in auctions in the past.
What would Beansprout do?
The 6-month Singapore T-bill yield has remained steady, even as US government bond yields have weakened significantly over the past month.
Also, T-bill cut-off yield may be supported by the significantly larger amount of T-bills to be issued in the upcoming auction, if demand does not rise sharply as well.
Looking at the latest indicators, the closing yield on 6-month Singapore T-bill of 3.75% is higher than the best 6-month fixed deposit rate of 3.65%.
As such, we believe the T-bill remains a safe way to earn a higher return on our savings in the short term.
The auction will be held on Thursday, 18 January 2024. This means that we would need to put in our cash applications for the T-bill by 9pm on 17 January (Wed).
The closing date for T-bill applications using CPF-OA differs across the three local banks.
- Applications for T-bills online using CPF OA via DBS close at 9pm on 17 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 17 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 16 Jan (Tue) Read our step-by-step guide to applying via UOB.
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.
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