The T-bill 9 Jan 2024 BS24100F auction result has concluded with a cut-off yield of 3.74%. Investors are likely satisfied with this result as the yield climbed slightly from the previous auction of 3.73%. With interest rates likely peaking, should we apply for T-bills?
Auction Result
Allotment Result
| Total Amount Allotted | S$6.1 billion |
| Amount Allotted to Non-Competitive Applications | S$2.4 billion |
| Total Amount Applied | S$12.8 billion |
| % of Competitive Applications at Cut-off Allotted | Approximately 66% |
| % of Non-Competitive Applications Allotted | 100% |
| Bid-to-Cover Ratio | 2.09 |
Yield and Price
| Cut-off Yield | 3.74% p.a. |
| Cut-off Price | 98.135 |
| Median Yield | 3.55% p.a. |
| Median Price | 98.23 |
| Average Yield | 3.06% p.a. |
| Average Price | 98.474 |
Yield Held Firm
Despite the steady decline since Q4 2023, this T-bill BS24100F auction concluded with a cut-off yield of 3.74%, a slight rise from the previous auction result. This yield is good news for investors because interest rates are projected to have peaked and may start reversing this year. The latest result continues the trend of stable yield we have seen since 2023. Overall, we are pleased with the result of this auction.
Resilient Demand
Demand remained strong in this T-bill BS24100F auction. The total application amount was $12.8 billion, while the available allotment amount was only $6.1 billion. We saw a higher non-competitive application amount, reaching $2.4 billion. Despite being dangerously close to the non-competitive allocation limit, all non-competitive bidders got 100% allocation for your application amount. Congratulations to everyone who got their allocation.
Because the non-competitive bid amount remained high, we will likely continue to use competitive bids in the following auctions to secure our allocation.
Where Are Interest Rates Heading?
From their last FOMC meeting, the Fed has signaled that they might have reached the end of their rate hike cycle. They projected three rate cuts this year. The market also expects the next move by the Fed is to cut the rate. The market is even more aggressive and expects up to six rate cuts this year.
Do you agree with this sentiment? If you think so, remember that you may be unable to reinvest your T-bill at this high rate when it matures six months later. Now can be an excellent time to consider locking in the current higher rates for longer by shifting your investment toward a longer-term instrument.
What Would We Do?
We think T-bill still provides a very competitive yield compared to alternatives such as fixed deposits. T-bill can be a solid option for investors looking to park their short-term cash into one of the lowest-risk instruments with guaranteed principal and interest payout.
As for us, we will continue to utilize T-bills for parking a smaller portion of our short-term cash while migrating a decent chunk into longer-term instruments to lock in the higher rates for longer. Although we believe the rate reversal may be more gradual than the market expects, we have already started to prepare for this potential rate reversal by parking our short-term cash into Singapore Savings Bond (SSB) to lock in the higher rates for the next ten years. SSB still provides us decent liquidity by allowing monthly redemption without penalty while earning the accrued interest.
Are you interested in applying for the next T-bill auction? If yes, you may follow our guide on how to buy T-bills.
If you plan on investing in T-bills using CPF, you can estimate the additional interest you may earn with our CPF T-bill calculator.
