Will the T-bill yield fall further in the auction on 26 October?

By Beansprout • 21 Oct 2023 • 0 min read

The closing yield on the 6-month Singapore T-bill has remained steady at 3.86% even as US government bond yields hit multi-year highs.

6-month singapore tbill 26 oct 2023

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What happened?

Investors in Singapore T-bills have been disappointed by the fall in yields in recent auctions.

The cut-off yield for the 6-month Singapore T-bill fell to 3.87% on 12 October from 4.07% in the previous auction.

Similarly, the cut-off yield for the 1-year Singapore T-bill fell to 3.7% on 19 October from 3.74% in the previous auction.

This led many investors to wonder if we might see a further decline in the cut-off yield in the upcoming 6-month Singapore T-bill auction (BS23121E) on 26 October.

Let us look at what the latest indicators are telling us on whether it might still be worthwhile applying for 6-month Singapore T-bill. 

singapore 6-month t-bill auction 26 oct 2023
Source: MAS

Will the yield on the 6-month T-bill fall further?

#1 – US bond yields reach multi-year highs

US government bond yields have risen further in recent weeks after Fed officials indicated that interest rates may remain higher for longer to bring down inflation.

In addition, US economic data such as retail sales has been stronger than expected, leading to expectations that the Fed may not be able to lower interest rates anytime soon.

In fact, the US 10-year government bond yield briefly reached 5% this week, representing the first time it has hit the psychologically important level since 2007.

US 10-year government bond yield oct 2023
Source: Tradingview


Like we have seen in previous weeks, the 10-year government bond yield has risen more sharply than the 1-year government bond yield.

The 1-year US government bond yield has been steady at about 5.4% since July this year. Recent concerns about interest rates remaining higher for longer have also not brought the yield above its recent peak of 5.5%.

US 1-year government bond yield oct 2023
Source: Tradingview

#2 – Singapore government bond yields have not gone up as much

Despite the sharp increase in US government bond yields, Singapore government bond yields has not gone up as much. 

The closing yield on the 10-year Singapore government bond has risen slightly to 3.40% on 20 October from 3.32% on 13 October 2023.

However, the closing yield on the 6-month Singapore government bond has stayed at 3.86% over the past week.

6-month singapore t-bill yield 26 oct 2023
Source: MAS


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 4.11% on 17 October, just slightly above the cut-off yield of 4.07% on 3 October.

3-month singapore t-bill 26 oct 2023
Source: MAS

#3 – Potential loss of more CPF interest

With more investors interested in applying for the T-bill using their CPF savings, we have been getting queries about where there might be a loss of additional CPF interest in the upcoming T-bill auction. 

You may have noticed earlier that the auction date will be on 26 October 2023, and the maturity date will be on 30 April 2024.

Since 30 April 2024 is the last day of the month, this may lead to a potential loss of 8 months of CPF OA interest assuming that the it will take at least one day to transfer funds from your CPF-IA back to your CPF-OA. 

This would raise the break-even yield required to make it worthwhile for investors to put their CPF OA funds in the T-bill

To find out if it might still be worthwhile to invest your CPF funds into the T-bill with the loss of additional interest, check out our CPF T-bill calculator

singapore t-bill breakeven yield cpf

What would Beansprout do?

The closing yield on the 6-month Singapore government bond yield has been steady at about 3.86% over the past week despite the surge in US bond yields.

This would also be quite similar to the cut-off yield in the previous 6-month T-bill auction on 12 October. 

However, it is important to note that the cut-off yield in the T-bill auction will still depend on the bids that come through. 

For example, we noted that there might be loss of additional CPF interest in the upcoming 6-month T-bill auction on 26 October. 

This may lead to fewer applications by CPF investors like we have seen in previous auctions where there may also be a loss of CPF interest, and subsequently a higher cut-off yield. 

With many moving parts, investors who are investing using cash and looking to make competitive bids for the T-bill auction can refer to the latest fixed deposit rate in considering our bids. 

Recently, the best 6-month fixed deposit rate has been raised to 3.60% per annum, while there are also savings accounts that allow us to earn an interest rate of 3.50% and above without jumping through hoops. 

The auction will be held on 26 Oct (Thur), which means that we would need to put in our cash applications by 9pm on 25 Oct (Wed).

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

Check out our comprehensive guide to T-bills to find out more about T-bills and how to apply. 

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

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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