6-month T-Bills yields jump to 4.07% – Why the huge move in interest rates? Demand for T-Bills plunge? (28 Sep 2023 Auction Results)



T-Bills auction results are out!

In my weekend article, I predicted a range of 3.70% – 3.75% on the T-Bills.

And boy…

That might go down as the miss of the century right there.

Because T-Bills yields soared to 4.07% – the second highest cut off yield in all of 2023.

You can see this charted below, a monster of a move right there.

What explains the big jump in T-Bills yields though?

Let’s dive in.


T-Bills yields jump to 4.07% (28 Sep 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 4.07% yield (a huge jump from 3.73% the previous auction).

Charted in graph form below.

An absolute, monster of a jump in T-Bills yields.

Almost as big as the jump we last saw in late 2022.

At 4.07% – this is the second highest T-Bills yield in all of 2023 (the highest was 4.2% in early Jan).

And if you remember, things were very different back in Jan, with OCBC offering 4.08% on their fixed deposits.

So the fact that we’re seeing such high T-Bills yields again is definitely very interesting.

Demand for T-Bills plunges to $9.3 billion?

The most immediate reason for the jump in T-Bills yields?

Demand for T-Bills plunged to $9.3 billion (from $11.2 billion the previous auction).

That’s a 17% drop in the demand for T-Bills.

In chart form below.

The last time demand for T-Bills was this low ($9.3 billion) – it was in late 2022 and T-Bills yields soared to 4.4% that auction.

US and Singapore short term Interest Rates are flat

Perhaps the most interesting quirk.

Is that unlike in late 2022, when market yields on the T-Bills traded at 4.4%.

As of today, 6 month T-Bills yields have barely even budged.

You can see the latest chart below, 6 month T-Bills yields have been flat at ~3.7% for the past 6 months.

If you look at 6 month US T-Bills, it paints a similar story.

Interest rates are flat for the past 3 months.

So the sharp jump in T-Bills yields this auction.

Comes despite the fact that market pricing on the 6 month T-Bills hasn’t changed much.

Suggesting this may be a one-off due to sharply lower demand?

Of course – the other way to see it is that trading liquidity on the 6 month T-Bills is so thin.

That it took a sharp move like that in this auction, for true price discovery for the T-Bills.

If so, we’ll see T-Bills pricing on the open market move materially the next day or two.

Let’s see.

But… long term interest rates have gone crazy

The real fireworks though – is in long term interest rates.

US 10 year interest rates have gone from 3.3% in May, to 4.6% this week.

While the Singapore 10 year interest rate, has gone from 2.7% in May, to 3.47% today.

So… what explains the move in T-Bills interest rates?

So let’s put all the above together:

  • Demand for T-Bills plunged 17% this auction
  • Market yields on 6 month T-Bills (both Singapore and US) have not moved materially
  • Market yields on long term >10 year government bonds (both Singapore and US) have gone up hugely

If this is fundamental driven, we’ll expect to see a move in market pricing for T-Bills yields leading up to the auction, but that hasn’t happened.

How 6 month T-Bills trade on the open market the next few days will be telling.

Why the sharp drop in demand for T-Bills?

I know some may point towards reduced demand from retail investors.

But I find it hard to believe this can explain a 17% drop, or $1.9 billion drop in T-Bills demand.

This looks like a drop in demand from institutional money for some reason.

Did institutional money start to chase the long end interest rates?

After all you can lock in close to 3.5% for 10 years risk free on a 10 year Singapore government bond today – why bother with 3.7% T-Bills in a climate like that?

Especially given that these are 6 month T-Bills, where you have refinancing risk in 6 months.

For what it’s worth, I don’t have any easy answers here.

But looking at interest rates the next few days will give us a lot more information.

I applied for this round of T-Bills

Personally I applied for this round of T-Bills, to replace my OCBC 4.08% fixed deposit coming due next month.

I didn’t expect such a huge jump in yields though, and that come as a pleasant surprise.

The big question now is whether you will see such high yields sustain in the next auction, which is not so clear.

After this result, you might see retail demand rebound strongly the next auction.

Let’s see.

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

There are always questions on how do you know if you have been allotted T-Bills.

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).

Otherwise, I break down the different scenarios below.

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 4.07%

99% allotment (approximately) if you applied 4.07%

No allotment if you applied 4.08% and above.


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  1. I read your 28sep t-bills analysis and wonder if you can advise why my competitive bid for $10k at 3.70% was unsuccessful? In fact, I had been unsuccessful with both competitive and non competitive bids when results reported full allotment. Thanks


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