The auction for T-bill BS24112W has concluded, and the cut-off yield was 3.74%, a slight decline from the previous auction’s 3.76%. Did you get your allocation? Let’s dive into this auction result.
Auction Summary
Here’s an overview of the auction results for T-bill BS24112W. Please note that the total amount allotted in this auction of $6.6 billion was lower than in the previous auction of $7.1 billion.
Cut-Off Yield Stayed Stable
After the previous auction broke a recent trend of declining yields, we saw another decent cut-off yield of 3.74% in this T-bill BS24112W auction. It is just a slight decline from the previous auction’s 3.76%.
The chart reveals that the T-bill yield has been hovering around the current range for over a year. Looking further back to early 2022, we can see that the current yield is among the highest in recent years.
How much longer will this higher yield last?
If you have been following the news, you would have known that even with sticky inflation, the Fed has hinted that they may start cutting rates towards the end of this year. This could be your chance to lock in this higher yield while it lasts.
Demand Jumped
We saw a significant demand jump in this T-bill BS24112W auction. The total application amount was $15.5 billion, $1.3 billion more than the previous auction’s amount. This high demand may be one contributing factor to the decline in the cut-off yield in this auction.
Non-Competitive Bids Hit the Cap
Again, this auction saw high demand from non-competitive bidders, and the cap was hit again. Non-competitive bidders only got ~83% of the allocation. We have been monitoring this trend in recent auctions, and the high-demand trend seems to persist. Because of that, we will utilize competitive bids in the coming auctions to ensure we can get our desired allocation.
T-Bill Alternatives
Let’s look into some popular T-bill alternatives should you not be able to get your desired allocation.
Fixed Deposits
The most popular T-bill alternative is fixed deposits. However, fixed deposits in Singapore have recently become one of the least competitive options. As of this writing, the highest 6-month fixed deposit rate offered by the Bank of China is only 3.3%. Due to this low interest rate, fixed deposits are not competitive alternatives to T-bills.
Cash Management Accounts
Another popular alternative to T-bills is cash management accounts—specifically, those with guaranteed payouts such as Syfe Cash+ Guaranteed and StashAway Simple Guaranteed. At the time of this writing, Syfe Cash+ Guaranteed offers 3.6% for its 6-month lock-in period, and StashAway Simple Guaranteed offers 3.5% for its 6-month period. Although both provide less than the 3.74% yield T-bills can offer, they are still relatively competitive. Just note that these cash management accounts are considered investments and, thus, are not SDIC-insured.
Singapore Savings Bonds (SSB)
Singapore Savings Bonds (SSB) is another popular alternative because of the rising rates in recent offerings. The latest SSB offers 3.30% interest rates for the 10-year average. Because you can redeem SSB partially or in full every month, SSB is even more liquid than T-bills. An additional benefit is that you can lock in the higher rates for much longer, up to 10 years, should you choose to.
What Would We Do?
We have utilized T-bills to park our short-term cash allocation and will continue to do so to enjoy the higher rates while they last. However, as we expect the rates to have peaked, and reversal may be on the horizon, we have started migrating some of our short-term cash into Singapore Savings Bonds (SSB) to lock the higher rates for much longer (ten years).
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.
