We have gotten the auction result for T-bill BS24106W: the cut-off yield was 3.80%. Awesome! This is a slight increase from the previous auction, which ‘only’ yielded 3.78%. Did you get your desired allocation? Let’s dive into the auction result.
Auction Result Summary
Here is the auction summary:
Stable Cut-Off Yield
The T-bill BS24106W auction observed a slight increase in the cut-off yield from 3.78% to 3.80%. This is welcome news, as the yield has been steady around this level in the past several auctions.
The chart above shows that the T-bill yield has been around this level since early 2023. Looking further back, we can also observe that the current yield of 3.80% is significantly higher than what we had in early 2022. In fact, the current yield is at one of the highest levels in recent years.
With the Fed expecting to start cutting interest rates this year, the window of opportunity to lock in this higher rate for longer may dwindle soon. What do you think? Do you agree with the Fed’s expectations?
Demand Jump Further
We previously covered a significant jump in demand in the previous auction. Guess what? We saw another significant jump again in this auction. The total amount applied was $15.6 billion, up from $14.4 billion. That is $1.2 billion more, wow!
At around 3.8% yield, T-bills have become competitive again compared to other fixed-income alternatives. Therefore, it is unsurprising that there is a hot demand for T-bills nowadays.
We also saw the non-competitive bids to hit the cap again this time. Non-competitive bidders only got 94% of their desired allocation due to the high demand. With this recent trend of non-competitive bids reaching the cap, we will likely continue to utilize competitive bids in future auctions to secure our desired allocation.
T-Bill Alternatives
The yield for T-bill BS24106W at 3.80% is competitive. The most common alternative is fixed deposits. As of this writing, the highest 6-month fixed deposit rate is 3.35%, offered by CIMB bank. If you are their preferred banking client, the rate is 3.40%. Either way, both are much lower than the 3.80% T-bills offer.
Alternatively, we can also consider Syfe Cash+ Guaranteed, which offers 3.80% for its 6-month lock-up period. Just note that with cash management accounts such as this Syfe Cash+ Guaranteed, you are not SDIC-insured because these are considered investments.
What Would We Do?
We are pleased with this latest auction result. We have always used T-bills to park our short-term cash, and we plan to continue doing so in the near future as the yield remains competitive.
However, with the expectation of interest rate reversal towards the latter half of this year, we have migrated some of our T-bills allocation into Singapore Savings Bonds (SSB). SSB allows us to lock in the rates for much longer, up to ten years, while still having the flexibility to redeem every month.
If you are interested in applying for the next T-bill auction, you may follow our guide on how to buy T-bills.
If you plan to apply with CPF, you can estimate the additional interest you may earn using our CPF T-bill calculator.
