Will the T-bill yield rebound in the auction on 19 Dec?

What happened

The final 6-month T-bill auction of 2024 is just around the corner, with the Singapore T-bill auction (BS24125S) coming up on 19 December 2024.

Over the past year, we have seen much discussion in the Beansprout community about whether it is worthwhile applying for the T-bill. 

In the previous 6-month T-bill auction, the cut-off yield fell dipped to 3.0%. Like many of you, I'm interested to find out if the yield for the upcoming auction will stay above 3.0%. 

In this post, I will be looking at the latest indicators to find out what might be the potential yield on the upcoming T-bill auction. 

Stay updated on the T-bill

Sign up to receive a free email reminder when the next Singapore T-bill auction is open.

Subscription preferences

• Reminder for Tbill

Will the Singapore T-bill yield rebounded in the auction on 19 December?

#1 – US bond yields have bounced

The US government bond yield has rebounded over the past week.

The 10-year US government bond yield has risen to 4.28% from 4.15% a week ago. This is driven by continued strength in the US economy, with the labour market staying resilient.  

The 1-year US government bond yield  bounced by a smaller extent, increasing from 4.19% one week ago to 4.27%.

#2 – Closing yield on 6-month Singapore T-bill has stayed the same

The rebound in US government bond yields has also led to a increase in the yield on Singapore government bonds. 

For example, the Singapore 10-year government bond yield has risen slightly to 2.74% from 2.68% a week ago. 

The closing yield on the 6-month T-bill was 3.00% on 11 December, same as the cut-off yield of 3.00% in the previous T-bill auction on 5 December.

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 3.29% in the auction on 10 December, higher than the cut-off yield of 3.20% in the auction on 3 December and 3.24% in the auction on 26 November. 

#3 - Smaller issuance size compared to the previous auction

The issuance size of the upcoming 6-month Singapore T-bill is $6.8 billion, slightly lower than S$7.1 billion in the previous auction. 

We saw an increase in the amount of T-bill applications to S$17.4 billion in the auction on 5 December from S$13.7 billion in the auction on 21 November.

If demand for the T-bill stays elevated, the smaller issuance size of the upcoming T-bill might limit how much the T-bill yield may increase. 

What would Beansprout do? 

While we have seen a bounce in the US government bond yields, this has not translated to a significant increase in the yield of Singapore bonds with shorter maturity. 

The closing yield on the 6-month Singapore T-bill was at 3.0% on 11 December, similar to the cut-off yield in the previous auction.

Although the closing yield of the 6-month T-bill is now at 3%, we would still consider other places to park our cash to earn a higher yield.

For example, the best 6-month fixed deposit rate of 3.20% p.a. is above the closing yield on the 6-month Singapore T-bill for cash investors with more than S$100,000. 

For CPF investors, the closing yield is also slightly 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 19 December.  We would need to put in our cash applications for the T-bills by 9 pm on 18 December (Wed).

Stay updated on the next T-bill

Sign up to receive a free email reminder when the next Singapore T-bill auction is open.

Subscription preferences

• Reminder for Tbill

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 18 Dec (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 18 Dec (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 17 Dec (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.

Join our Beansprout Telegram group for the latest insights on Singapore stocks, REITs, bonds and ETFs.