The auction result for T-bill BS24110T has been released. The cut-off yield declined to 3.65%, down from 3.70% in the previous auction. Were you satisfied with the result? Let us dive further into this auction result.
Auction Result Summary
Here is the T-bill BS24110T auction summary:
Yield Declined Further
After several auctions with declining yields, this T-bill BS24110T auction continued the trend with a cut-off yield of 3.65%. This likely disappointed many investors who have been used to the high yield since late 2022. Here is the 6-month T-bill historical yield chart:
Despite the declining yield in recent auctions, the latest yield of 3.65% is still among the highest in recent years. We have been hovering in this range throughout 2023 and 2024.
The recent sticky inflation data has caused the market to price in higher rates for longer. Even with such sentiment, we still see the downtrend in T-bill yield.
Relatively Lower Demand
This T-bill BS24110T auction saw much lower demand than the previous auction. The total application amount was only $14.5 billion, a significant decline from $16.3 billion in the last auction. That was around an 11% decline, whew!
However, despite the decline, demand is still relatively elevated compared to what we usually get in 2023. The higher demand demonstrates that T-bills remain one of investors’ favorites for short-term investments.
Full Allocation to Non-Competitive Bidders
This auction also saw a higher available allotment of $7 billion. This is good news! With the lower demand and higher available allotment amount, all non-competitive bidders managed to get their full desired allocation. After several auctions hitting the non-competitive cap, this auction breathed a sigh of relief as we finally got the 100% desired allocation. Yay!
We will continue to monitor the demand for non-competitive bids in the coming auctions to see if the higher demand trend persists. For now, we will still stick with competitive bids in the next auction to ensure that we secure our desired allocation.
What Would We Do?
We compare T-bills to other alternatives, such as fixed deposits and cash management accounts with guaranteed payouts.
RHB Bank offers the highest 6-month fixed deposit rate in Singapore at 3.25%. If you are their premier banking client, you can get up to 3.30%. Regardless, this is still much lower than the 3.65% T-bills can offer.
As for cash management accounts, we look at Syfe Cash+ Guaranteed for its similarity to T-bills with guaranteed principal and payouts. Their 6-month lock-up period yields 3.75%, higher than the latest T-bill yield. If you miss the latest T-bill offering, Syfe Cash+ Guaranteed can be an alternative option. Please note that SDIC does not insure cash management accounts because they are considered investments.
As for us, we have migrated a portion of our short-term cash position into Singapore Savings Bonds (SSB) to lock in the higher rates for much longer (ten years!). The rest of our short-term allocation will still go to T-bills to enjoy the higher short-term rates while they last.
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.
