6-month T-Bills yields drop further to 3.65% – Demand for T-Bills falls from record highs (23 May 2024 Auction Results)



In my weekend article, I estimated a yield of 3.60% – 3.75% for the upcoming 6-month T-Bills auction.

The auction results are out at 3.65% cut off yield, in the middle of my projected range.

Unfortunately, this continues the trend of declining T-Bills yields, as you can see from the chart below.

This is the second lowest yield we have seen in all of 2024 – the lowest being 3.54% in Feb 2024.

Let’s dive into the numbers.


6-month T-Bills yields drop to 3.65% (23 May 2024 Auction Results)

The cut-off yield for the latest T-Bills auction is set out below.

This round of 6-month T-Bills are issued at 3.65% yield (which is a drop from 3.70% the previous auction).

T-Bills yields since late 2022 are charted in graph form below.

You can see how T-Bills yields have generally stabilised around the 3.7 – 3.8% range for 6 auctions in a row.

However, in the most recent auction T-Bills yields have dropped out of that range to 3.65%.

Demand for T-Bills drops from record highs to $14.5 billion (vs $16.3 billion the last auction)

This drop in T-Bills yields comes despite the fact that T-Bills demand fell quite a bit.

Demand for T-Bills this auction came in at $14.5 billion, which is 11% lower than the previous auction.

You can see below that demand drops quite a bit from record highs, although it remains very elevated vs 2022/2023 demand levels.

Investors just cannot get enough of T-Bills it seems, especially with declining Fixed Deposit rates.

This is despite auction amount for T-Bills going up to $7.0 billion (vs $6.8 billion the previous auction)

Another point to note is that the T-Bills auction amount of $7.0 billion this time around.

Is higher than the $6.8 billion T-Bills on offer in the previous auction.

So the fact that the T-Bills yields went down despite the higher auction amount, and the lower T-Bills demand.

This suggests that there is strong downward pressure on the T-Bills yields.

Still a lot of low-ballers for T-Bills?

The spread between the median and average yield tells you how many “low-baller” bids there were.

To illustrate what this is:

Imagine you have 100 bids.

The median yield, is if you arrange all the bids from small to high, and take the yield of the 50th bid.

While average yield, is adding up the yields of all 100 bids and dividing by 100.

So average yields are skewed by lowball bids, while median yields are not.

To put it simply – the bigger the spread between the median yield and average yield, the more “low-ballers”.

Spreads have actually stabilised for 4 auctions in a row.

Before jumping quite noticeably in the most recent 2 auctions.

I suppose some of this has contributed to the lower T-Bills yields.

How do you know if you have been allotted T-Bills for this Auction?

If you applied Non-Competitive Bid, you will get 100% allotment of whatever you applied for (this has increased from 81% the last auction).

Basically – If you applied $100,000, you get $100,000 worth of T-Bills allotted.

If you applied Competitive Bid, then:

Full allotment if you applied below 3.64% and below.

90% allotment (approximately) if you applied 3.65%

No allotment if you applied 3.66% and above.

If you forgot what you bid, the easiest way is to check if you have any refund from your bank tonight.

Some banks like OCBC will also issue you a confirmation note (but DBS doesn’t).

BTW – we share commentary on Singapore Investments every week, so do join our Telegram Channel (or Telegram Group), Facebook and Instagram to stay up to date!

I also share thoughts on Twitter regularly.

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