THE cut-off yield on the latest six-month Treasury bill (T-bill) in Singapore has risen to 3.89 per cent, at the close of its auction on Thursday (Jun 22).

Applications for the risk-free, government-backed fixed income product totalled S$9.9 billion for the S$5 billion on offer, resulting in a bid-to-cover ratio of 1.98.

In comparison, the previous auction for the six-month tenor of the T-bills offered a cut-off yield of 3.84 per cent, and received total applications of S$11.5 billion for the S$5.2 billion on offer.

In the latest auction, non-competitive bids totalled S$1.8 billion and were fully allotted.

Those who submitted competitive bids at the cut-off yield were allotted around 74 per cent of their applications. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not allotted.

DBS rates strategist Duncan Tan expects that the near-term yield curves in Asia – such as for zero to two-year yields – would be more anchored by a policy pause in Asia, while the curve further out would follow rates in developed markets.

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While inflation in Asia is coming down and central banks in the region seem to be done with hiking, there are still upside risks to inflation in developed markets, and several of their major central banks would still be hiking rates in the second half of the year, Tan said in a note on Thursday.

He said: “Extension of developed market hike cycles and higher developed market rates could still exert a material upward pull on Asia rates, especially further out on the curve.”