Latest Singapore 6-month T-bill offers cut-off yield of 3.8%

THE cut-off yield on the latest Singapore six-month Treasury bill (T-bill) rose slightly to 3.8 per cent, according to auction results released by the Monetary Authority of Singapore (MAS) on Wednesday (Mar 27).

The previous auction, which closed on Mar 14, offered 3.78 per cent yield.

Demand continued to rise in the latest tranche. The auction received a total of S$15.6 billion in applications for the S$6.1 billion on offer, representing a bid-to-cover ratio of 2.55.

In comparison, the previous auction received S$14.4 billion in applications for the S$6.3 billion on offer.

Eugene Leow, senior rates strategist at DBS, said that there were some hints from recent MAS bill auctions that this T-bill cut-off would still be relatively high.

While the narrative of the Fed being on hold for a while more has not changed, Leow expects seasonal factors may also be at play in the current auction, with short-term rates elevated at the end of the quarter.

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Upside from current levels will likely be limited if the Fed maintains an easing bias for the year, he added.

Around 94 per cent of non-competitive applications, totalling S$2.4 billion, were allocated.

Meanwhile, around 30 per cent of competitive applications at the cut-off yield were allotted. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.

T-bill yields hit a 30-year high of 4.4 per cent in December 2022, and have mostly hovered around the 3.7 to 3.8 per cent range since March 2023, amid the high-interest-rate environment.

The US Federal Reserve is expected to cut interest rates in 2024. In March, it affirmed its decision for three cuts this year, despite higher inflation figures for January and February.