Will the T-bill yield go up further in the auction on 5 Dec?

What happened

The next 6-month Singapore T-bill auction (BS24124Z) will be coming up on 5 December 2024.

With 2024 coming to an end, I noticed that this will be the second last 6-month Singpapore T-bill auction this year. 

After the cut-off yield for the previous 6 month T-bill rebounded to 3.08%, there has been more discussion in the Beansprout community on the T-bill again. 

As such, I decided to find out what the latest indicators tell us about the potential yield on the upcoming T-bill auction. 

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Will the Singapore T-bill yield go up further in the auction on 5 December?

#1 – US bond yields have fallen slightly

The US government bond yield has declined over the past two weeks. This follows US President-Elect Donald Trump's nomination of fund manager Scott Bessent as US Treasury Secretary, which is seen as a force of stability who will pursue more measured policies. 

The 10-year US government bond yield has fallen to 4.25% from 4.45% two weeks ago. 

The 1-year US government bond yield has also declined by a smaller extent to 4.34% from 4.42% two weeks ago. 

#2 – Closing yield on 6-month Singapore T-bill has also fallen slightly

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

For example, the Singapore 10-year government bond yield has fallen to 2.78% from 2.95% two weeks ago. 

The closing yield on the 6-month T-bill was 3.05% on 28 November, down from the cut-off yield of 3.08% in the previous T-bill auction on 21 November.

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 3.24% in the auction on 26 November, lower than the cut-off yield of 3.28% in the auction on 12 November. 

#3 Larger issuance size compared to the previous auction

The issuance size of the upcoming 6-month Singapore T-bill is $7.1 billion, slightly higher than S$7.0 billion in the previous auction. 

We saw an increase in the amount of T-bill applications to S$13.7 billion in the auction on 21 November from S$12.3  billion in the auction on 7 November.

If demand for the T-bill were to continue rising, we might see further pressure in the cut-off yield for the T-bill. 

What would Beansprout do? 

We have seen a fall in Singapore government bond yields with the decline in US bond yields. 

The closing yield on the 6-month Singapore T-bill was at 3.05% on 28 November, slightly lower than the cut-off yield in the previous auction.

For cash investors, the closing yield on 6-month Singapore T-bill is now above the best 6-month fixed deposit rate of 2.90% p.a. 

However, it is below the best 1-year fixed deposit rate of 3.20% p.a. 

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.

It is also worth noting that the cut-off yield for the T-bill auction will eventually depend on the applications that are submitted, and global bond yields remain volatile.

With the volatility, we can also consider making a competitive bid for the T-bill to make sure that we do not end up with a lower than expected yield.

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

The 6-month Singapore auction will be held on 5 December.  We would need to put in our cash applications for the T-bills by 9 pm on 4 December (Wed).

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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 4 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 4 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 3 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.

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