Latest Singapore 6-month T-bill cut-off yield rises to 3.06%
This is up from the 2.97% offered in the previous auction that closed on Sep 26
THE cut-off yield on the latest Singapore six-month Treasury bill (T-bill) rose to 3.06 per cent, auction results released by the Monetary Authority of Singapore on Thursday (Oct 10) indicated.
This is up from the 2.97 per cent offered in the previous six-month auction that closed on Sep 26.
The previous auction was also the first time the yield fell below the 3 per cent mark since September 2022.
Yields had stayed elevated during the past two years as the US Federal Reserve kept interest rates high to combat post-pandemic inflation.
The latest auction result comes despite some analysts pointing out that T-bill rates will continue to fall in the coming months amid further rate cuts.
But Eugene Leow, senior rates strategist at DBS, noted that there was “too much exuberance” a few weeks ago on the pace of Fed cuts.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“Now that labour market data in the US is proving to be resilient, the market has pared expectations on the pace of Fed easing over the coming few months. Accordingly, T-bill rates have risen slightly,” he added.
“As long as the Fed cut cycle is intact, this should be a blip,” he said, maintaining that T-bill rates should “grind lower” over the next few months.
Analysts from UOB Global Economics and Markets Research said in a note on Thursday that they projected 50 basis points (bps) of cuts for the remainder of 2024.
They also maintained their estimations of 100 bps of cuts in 2025.
Similarly, Cheong Wei Ming, fixed income portfolio manager at Eastspring Investments, said there are many factors that can drive near-term moves.
“That said, we can observe that earlier market expectations of an aggressive US rate cut have shifted, and this is reflected in the latest market prices,” he added.
“Given the strong correlation to US dollar rates, we still expect Singdollar yields to trend lower over time.”
Demand rose in the latest tranche.
The auction received a total of S$14.9 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 2.19.
In comparison, the previous auction received S$13.9 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 2.05.
Median yield for the latest auction stood at 2.9 per cent, up from 2.85 per cent in the previous auction.
Average yield inched down to 2.76 per cent, from 2.79 per cent previously.
Non-competitive bids totalled S$1.4 billion and were fully allotted.
About 68 per cent of competitive applications at the cut-off yield were allotted.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022, and have hovered above the 3 per cent level since.
However, when the Fed slashed interest rates by 50 bps in September, yields fell.
Copyright SPH Media. All rights reserved.
