Will the Singapore T-bill yield rebound as US bond yields spike?



By Beansprout • 25 Aug 2023 • 0 min read

The closing yield on the 6-month Singapore T-bill has stayed at about 3.74% despite the surge in US government bond yields.

t-bill singapore auction 31 august 2023
In this article

What happened?

Many investors would probably have seen the headlines this week that that US government bond yields have jumped to the highest levels since 2007.

Fed Chairman Jerome Powell also said at the Jackson Hole symposium that there might be further rate hikes as inflation is 'too high'.

This led many investors to wonder if we will see a rebound in the yield on the Singapore 6-month T-bill in the upcoming auction (BS23117Z) on 31 August 2023.

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

Source: MAS


Will the yield rebound in the upcoming 6-month T-bill auction 

#1 – US bond yields have risen sharply

As we shared earlier, US government bond yields have risen in recent weeks after Fitch downgraded the US credit rating and the latest Fed minutes indicated that there could be more rate hikes in the future to bring down inflation.

We have seen a larger increase in the yield of bonds with a longer maturity period as investors expect interest rates to remain higher for longer. 

For example, the 10-year US government bond yield is now at about 4.25%, having gone up sharply from about 3.5% in June this year.  

Source: Tradingview


The US 2-year government bond yield has gone up as well but to a smaller extent. It is now at about 5.05%, still slightly below the level it reached after the collapse of Silicon Valley Bank earlier this year. 

Source: Tradingview


#2 – Singapore bond yields have risen slightly

Following the increase in US government bond yields, we have seen Singapore government bond yields rising in recent weeks as well.

However, the increase is more pronounced once again in government bonds with longer maturities.

For example, the closing yield on the Singapore 10-year government bond yield has gone up to 3.3% on 25th August 2023 from 3.2% on 18th August 2023.

However, the yield on the Singapore 6-month T-bill has been relatively unchanged over the past week, closing at 3.74% on 25 August 2023. 

This is not too different from the cut-off yield on the 6-month T-bill auction on 17th August 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 was at 4.01% on 22 August, slightly higher than the cut-off yield of 3.95% on 15th August. 

However, it still remains below the range of 4.1-4.2% in June and July this year.  

Source: MAS


#3 – Will there be loss of additional CPF interest?

For investors who are looking to invest in the Singapore T-bill using their CPF OA funds, there is always a concern about whether there might be loss of 1 or 2 additional months of CPF interest by investing in the 6-month T-bill.

Someone in the Beansprout community recently asked if the upcoming 6-month T-bill auction might be one of those where we might see 8 months of CPF interest loss, given the auction date of 31st August 2023 and maturity date of 5th March 2024.

However, some community members chipped in to share that the funds are typically deducted from the CPF OA account one day after the T-bill auction. Hence, if the banks continue to operate this way, then the deduction will happen on 1st September, which will lead to a loss of just 7 months of CPF interest.

To find out how much more interest you can potentially earn on the T-bill compared to leave your money in the CPF OA, check out our CPF T-bill calculator.   

What would Beansprout do?

The cut-off yield on the Singapore 6-month T-bill has fallen consistently to reach 3.73% in the auction on 17 August from a recent high of 3.99% on 6 July.

For investors who are hoping that the increase in US government bond yields will translate to higher T-bill yields, it might be worthwhile to note that most of the rise in yields has been for bonds with longer maturities.


The closing yield on the 6-month T-bill has been relatively unchanged in the past week, closing at 3.74% on 25th August.

This would still be above the current best 6-month fixed deposit rate of 3.50% per annum. It would also be slightly above the recent promotional 12-month fixed deposit rate of 3.55% offered by SBI. You can check out our guide to the best fixed deposit rates in Singapore to compare the latest rates offered.

It is also above the promotional interest rate of 3.50% per annum offered by the CIMB FastSaver account and Maybank iSAVvy account.

The auction will be held on 31 Aug (Thur), which means that we would need to put in our cash applications by 9pm on 30 Aug (Wed).

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

Learn more about T-bills with our comprehensive guide. 

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