6-month T-Bills yields jump to 3.95% – Big drop in demand for T-Bills (26 Oct 2023 Auction Results)



T-Bills auction results are out!

As a reminder, 2 auctions ago the T-Bills cut-off yields went as high as 4.07%.

This led in a surge in application amounts for the previous auction (58% increase in demand) – which led to yields dropping from 4.07% to 3.87%.

Well, the T-Bills demand came back down to earth this auction.

Dropping 21.7% to $11.5 billion ($14.7 billion the previous auction).


Because of that T-Bills yields went up.

In my weekend article I estimated a range of 3.75% – 3.95% on the 6-month T-Bills.

Final cut-off yields came in on the high side of that, at 3.95% this auction (3.87% the previous auction).

With 100% allotment for non-competitive bidders.

Pretty interesting results, so let’s dive in.

6-month T-Bills yields jump to 3.95% (26 Oct 2023 Auction Results)

I’ve extracted the cut-off yield for the latest T-Bills auction below.

This round of 6-month T-Bills are issued at 3.95% yield (an increase from 3.87% the previous auction).

I’ve charted this in graph form below.

Yields are decently high all things considered, near the highest it has been in all of 2023.

The fact that you can get 3.95% yield risk free, really makes a lot of other investments look less attractive in this climate.

Demand for T-Bills drops to $11.5 billion?

Demand for T-Bills actually dropped quite sharply.

From $14.7 billion the previous auction, to only $11.5 billion this auction.

That’s a whopping 21.7% drop in T-Bills demand.

In chart form below.

Viewed this way the massive demand for T-Bills the past auction looks a bit like a freak result.

And the $11.5 application amount is much more in line the rest of 2023.

But… not that many lowballers? Spread between median and average yield

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”.

This time around, the spread went down slightly – and remains near the lows of 2023.

In plain English – this means that demand for T-Bills went down, and the investors bidding were quite rational in their bids.

Nothing too crazy like bidding 1.0% just to ensure you get an allotment (or at least not a lot of those).

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

If you applied Non-Competitive Bid, you will get 100% allotment of whatever you applied for.

Ie. If you applied $10,000, you get $10,000 worth of T-Bills allotted.

If you applied Competitive Bid, then:

Full allotment if you applied below 3.95%

84% allotment (approximately) if you applied 3.95%

No allotment if you applied 3.96% 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).


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