Will the T-bill yield bounce above 3.78% in the auction on 27 March?

By Gerald Wong, CFA • 23 Mar 2024 • 0 min read

The closing yield on the 6-month Singapore T-bill is at 3.73%, below the cut-off yield in the previous auction.

singapore t bill auction 27 march 2024

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What happened?

T-bills seem to be back in favour again.

This is especially so as the yield on the Singapore T-bill has remained high, even as fixed deposit rates have been falling. 

It is no wonder that there have been questions in the Beansprout community on whether we will continue to see the yield in the upcoming Singapore T-bill auction (BS24106W) on 27 March 2024 remaining elevated. 

Let us look at the latest indicators to find out what to expect in the upcoming 6-month Singapore T-bill auction.

Also, read on to find out what you need to be aware about the upcoming auction if you are applying for the T-bill using your CPF savings. 

Source: MAS

Will the T-bill yield rise further in the auction on 27 March?

#1 – US bond yields have been volatile

US government bond yields have volatile in the past few weeks as investors reacted to various economic data.

Initially, we saw a bounce in the US government bond yields after inflation remained sticky with the consumer price index rising more than expected

Thereafter, bond yields moderated as the Fed kept interest rates unchanged and Fed Chairman Jerome Powell indicated that indicated that we are still likely to see rate cuts in 2024

As a result, the 2-year US government bond yield has risen to 4.6% from 4.5% earlier this month, though moderating from a recent high of above 4.7%. 

Source: Tradingview


Likewise, the US 10-year government bond yield has risen to 4.2% from 4.1% earlier in the month, though moderating from a recent high of above 4.3%. 

Source: Tradingview

#2 – Singapore bond yields have been relatively stable

The yields on longer maturity Singapore government bonds have remained relatively stable despite the volatility in US government bond yields. 

The closing yield on the 10-year Singapore government bond on 22 March was 3.07%, quite similar to where it was at the start of the month. 

Likewise, the closing yield of the 6-month Singapore T-bill of 3.73% as of 22 March is just slightly lower than the cut-off yield of 3.78% in the previous T-bill auction on 14 March.

Source: MAS


The cut-off yield on the 3-month MAS note has been fairly stable at 3.94% in the auction on 19th March, close to the yield of 3.95% in the auction on 5th March. 

Source: MAS

#3 – Potential loss of additional CPF interest

One of the questions we have been getting is whether there will be a loss of additional CPF interest in the upcoming auction on 27th March. 

Here, it is worth noting that the T-bill issuance date is on 2 April and the maturity date is on 1 October. 

Based on sharing from the Beansprout community, the deduction for successful CPF applications is typically done one business day after the auction date.

This means that there will be potentially 8 months of CPF interest loss from March to October.

The loss of additional CPF interest will mean that the break-even yield for the T-bill auction will be higher. 

singapore t-bill breakeven yield cpf

To find out if it might still be worthwhile applying for the T-bill using CPF with the loss of additional CPF interest, you can check out our CPF-T-bill calculator

However, as a member in the Beansprout community pointed out, the loss of two additional months of CPF interest may matter more if you plan to stop investing in the T-bill and transfer the fund back to your CPF account. 

If you intend to roll over to an upcoming T-bill when the existing one matures, then the impact may not be as significant. 

In the past, we have seen lower demand for the T-bill when there is additional CPF interest loss, as there may be less applications using CPF funds.

However, this may be offset by a decline in the amount of T-bills issued to S$6.1 billion from S$6.3 billion in the previous auction. 

What would Beansprout do?

There are several reasons to expect the cut-off yield in the upcoming T-bill auction on 27th March to remain high.

Firstly, Singapore government bond yields have been fairly stable even as US government bond yields have been volatile.

Next, there might be lower demand for T-bills with the loss of additional CPF interest in the upcoming auction. 

Hence, we see the T-bill as a good option to park our savings, especially with fixed deposit rates coming down in recent weeks.

Due to the upcoming Good Friday holidays, the T-bill auction will be held on Wednesday 27 March 2024. This means that we would need to put in our cash applications for the T-bill by 9pm on 26 March (Tue).

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

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.

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

This article was first published on 23 March 2024 .

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