6-month T-Bills yields stabilise at 3.74% – Demand for T-Bills drops from record highs (25 April 2024 Auction Results)



In my weekend article, I estimated a yield of 3.70% – 3.85% for the upcoming 6-month T-Bills auction.

Well, the auction results are out – 3.74%, towards the lower end of my projected range.

However T-Bills demand fell quite a bit to $14.4 billion (vs $16 billion the previous auction).

While auction amount increased to $6.6 billion (vs 6.3 billion the previous auction).

All while the market has moved to price in less interest rate cuts in 2024.

So the fact that T-Bills yields actually went down slightly (3.74% vs 3.75% the past auction) is interesting.


6-month T-Bills yields drop to 3.74% (25 April 2024 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 3.74% yield (a drop from 3.75% the previous auction).

This is charted in graph form below.

While T-Bills yields are well off the Feb lows, and comfortably back into the 2023 range.

You can also see how T-Bills yields have generally stabilised around the 3.7 – 3.8% range the past 5 auctions.

Demand for T-Bills drops to $14.4 billion (from $16.0 billion the last auction)

What is interesting is that demand for T-Bills dropped quite a bit.

We’re seeing only $14.4 billion in T-Bills applications, which is down 10% from the previous auction ($16.0 billion).

Charted below, you can see how T-Bills demand has come down quite a bit from recent highs – although it still remains much higher than the demand we saw in 2023.

As to why T-Bills demand tapered off, its not very clear.

Perhaps because it’s the end of the month, CPF-OA buyers prefer to wait for the next tranche.

Or perhaps the 1-year T-Bills auction just a week ago sucked up some of the excess liquidity.

While auction amount for T-Bills goes up to $6.6 billion (vs $6.3 billion the previous auction)

The auction amount of $6.6 billion this auction is actually higher than the $6.3 billion the previous auction.

So the fact that the cut-off yields went down despite the higher auction amount is notable.

This suggests that had auction amounts not gone up, we might have seen a bigger drop in T-Bills yields.  

Less lowballers, more rational bidding for T-Bills? Due to stabilisation in yields?

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 the past 4 auctions.

This suggests that investors are pretty rational with their bidding, and not submitting lowball bids just to get an allotment.

A good reason for this could be the fact that yields have stabilised around the 3.7% – 3.8% level, so investors have more certainty around where to submit their competitive bids.

How do you know if you have been allotted T-Bills? (25 April 2024 Auction)

If you applied Non-Competitive Bid, you will get 96% allotment of whatever you applied for (down from 94% the last auction).

Ie. If you applied $100,000, you get $96,000 worth of T-Bills allotted.

If you applied Competitive Bid, then:

Full allotment if you applied below 3.73% and below.

21% allotment (approximately) if you applied 3.74%

No allotment if you applied 3.75% 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!

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