Singapore 6-month T-bill cut-off yield stays flat at 1.44% after turnaround at previous auction
This is unchanged from the 1.44 per cent offered in the last six-month auction that closed on Sep 25
[SINGAPORE] The cut-off yield on Singapore’s latest six-month Treasury bill (T-bill) stood at 1.44 per cent, according to auction results released by the Monetary Authority of Singapore on Thursday (Oct 9).
This was unchanged from the 1.44 per cent offered in the last six-month auction that closed on Sep 25 – where the cut-off yield rose for the first time after falling for 13 consecutive issuances since Mar 26.
The latest auction received a total of S$14.8 billion in applications for the S$7.8 billion on offer, representing a bid-to-cover ratio of 1.9. In comparison, the previous auction received a total of S$13.5 billion in applications for the S$7.7 billion on offer, which translated to a 1.75 bid-to-cover ratio.
The median yield for the latest auction rose to 1.38 per cent from 1.33 per cent in the previous auction. The average yield climbed to 1.29 per cent from 1.23 per cent previously.
All non-competitive bids were allotted, amounting to S$1.2 billion, while around 74 per cent of competitive applications at the cut-off yield were allotted.
DBS senior rates strategist Eugene Leow observed that the Fed’s easing appears to be already well-priced into short-term Singapore dollar rates. As the Fed cuts rates further, he reckons that T-bill cut-off yields may see a “slight downward bias” in the coming months.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Noting that the bid-to-cover ratio has edged up, Frances Cheung, head of foreign exchange and rates strategy at OCBC, remarked that the previous auction’s improved cut-off yield likely drew back some investors.
She said that the cut-off yield came in within expectations of a 1.42 to 1.46 per cent range, as front-end Singapore dollar rates have turned stable after earlier upward adjustments. Some further upward adjustment in Singapore dollar interest rates over time may be expected, she added.
DBS senior rates strategist Eugene Leow said: “The cut-off yield is modestly lower than the last six-month auction as investors gear up for two more Fed cuts this year. Pass-through from Fed cuts to lower Singapore dollar rates should continue to be muted.”
Frances Cheung, head of foreign exchange and rates strategy at OCBC, noted that the cut-off yield is “in line with (the) market traded short-end Singapore dollar interest rate, which has stayed at a relatively low level”.
“Demand was decent thanks to the still flush Singapore dollar liquidity. Over the medium term, we expect some upward normalisation in Singapore dollar interest rates, but this expected adjustment is likely to be slow,” she said.
Singapore will issue up to another S$450 billion in government securities, with a parliamentary motion having been passed last November to raise the government’s issuance limit to S$1.515 trillion, from S$1.065 trillion previously. The new limit is expected to last until 2029.
Copyright SPH Media. All rights reserved.
