Will the T-bill yield fall with the Fed pause on rate hikes?



By Beansprout • 17 Jun 2023 • 0 min read

The yield on Singapore 6-month T-bill has been steady after the US Fed's decision to keep interest rates unchanged.

T-bill auction 22 June 2023

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What happened?

After the US Fed announced a pause in its interest rate hikes this week, there were questions about how this will affect the T-bill yield. 

In fact, many were worried that we might start to see a fall in the cut-off yield in the upcoming Singapore 6-month T-bill auction (BS23112N) on 22 June 2023

Let us take a look to see if it might still be worthwhile to apply for the 6-month T-bill.

Source: MAS


Will the T-bill yield fall with the Fed pause on rate hikes?

#1 – US bond yields remains high

Despite the pause in rate hikes, the US government bond yield remains high. 

For example the US 1-year government bond yield is at about 5.3% as at 16 June 2023, quite close to the high in March following the collapse of Silicon Valley Bank.

This could be due to expectations that the Fed may continue to raise interest rates later in the year. 

Source: Tradingview


#2 – Singapore government bond yields have been steady

Mirroring the elevated US government bond yields, the Singapore government bond yield has also remained at fairly high levels. 

For example, the closing price on the 6-month government bond yield was at 3.83% p.a. on 16 June 2023, quite close to the cut-off yield in the auction on 8 June 2023. 

Source: MAS


Likewise, the cut-off yield on the 3-month MAS note remains high at 4.15% during the auction on 13 June.

It is also quite close to the cut-off yield in the auctions in the two previous weeks of 4.21% and 4.10%. 

Source: MAS



#3 – Will we see lower CPF applications?

With the upcoming T-bill auction happening close to the end of the month, there are naturally concerns about whether there could be loss of two additional months of CPF interest for applications using CPF OA funds.

We have seen lower applications for auctions at the end of the month previously due to this concern about losing an additional month of CPF interest. 



The issue date of the upcoming T-bill will be on 27th June. The maturity date will be on 26th December 2023.

This will mean we will just have three working days left in the month to transfer the funds back into our CPF OA accounts following maturity. 

What this means is that you will have to instruct the bank to transfer your funds back into your CPF-OA account immediately after the T-bill matures and money is credited back into your CPFIA. 

Based on the experience of some in the Beansprout community who have given the instruction to DBS to transfer back the funds back to CPF-OA on the day of maturity, the funds can be potentially transferred back to the CPF OA within one working day.

This means that there is still a possibility that we will only lose one month of additional CPF interest in the upcoming 6-month T-bill auction if we instruct the bank to transfer the funds back to the CPF-OA account on the day the T-bill matures, and the bank is able to effect the transfer within one working day.

You might find our T-bill calculator useful in finding out how much more interest you can potentially earn by investing your CPF-OA funds in the upcoming 6-month T-bill auction based on these assumptions.

What would Beansprout do?

The closing yield on the Singapore 6-month T-bill has remained steady at about 3.83% p.a. as US government bond yields have remained high after the recent pause in Fed rate hikes.  

This is higher than the best 6-month fixed deposit interest rate of 3.55% p.a., especially as banks have been lowering their fixed deposit rates in recent weeks.  

This would mean that it might be worthwhile considering investing in the T-bill rather than putting our money into fixed deposit.

However, the outcome of the T-bill auction will depend eventually on the applications submitted. 

Here's one point to take note of if you are thinking of applying for the upcoming T-bill.  We have seen the amount of non-competitive bids getting quite close to allotment limit in the previous auction. This would mean 

This would mean that if the amount of non-competitive bids continue to increase and exceed 40% of the T-bill issuance, investors who put in a non-competitive bids may not be able to get full allocation of their applications in future auctions. 

One way to increase the likelihood of getting our desired allocation and not buying the T-bill at a lower than expected bond yield is to consider putting in a competitive bid in the auction

For CPF applications, we can calculate how much more interest we can potentially earn by investing our CPF funds into the T-bill at different interest rates using our T-bill calculator. 

The auction will be held on 22 June (Thur), which means that we would need to put in our cash applications by 21 June (Wed). 

The closing date for T-bill applications using CPF-OA differs across the three local banks now offering the function.

Sign up for the iFast Mid-Year Review on 8 July 2023 to learn more about how to position your portfolio and manage your personal wealth in the second half of the year.

Join the Beansprout Telegram group to get the latest updates on Singapore bonds, stocks, ETFs and REITs. 

Make your CPF savings work harder

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.

Calculate now

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