Latest T-Bill auction results are out!
4.19% for the 6 month T-Bills.
Which are very, very attractive indeed.
Remember, T-Bills are backed by the Singapore government and pretty much risk-free.
So this is a pretty attractive return.
Allotment Results of latest T-Bills (4.19%)
Allotment wise – we still see 100% of non-competitive applications allotted:
Cut-off yield is 4.19% as shared above:
How High will T-Bills go this cycle?
In my recent article, this was what I shared:
“Latest Futures markets are pricing in a peak US Fed Funds Rate of about 4.75 – 5.25%, by mid 2023.
Let’s be conservative and assume SGD interest rates peak slightly below US interest rates.
I think realistically, you could see T-Bills trade anywhere from 4.25% – 5.0% by end of this cycle.”
Time to start buying T-Bills?
So with the latest round of T-Bills at 4.19% very close to the bottom end of my range, I think we’re very rapidly approaching the interest rate end game here.
Sure, I don’t think we’re at cycle peak just yet, and there’s probably room for T-Bill rates to go up a bit more.
But at these kind of numbers, I think it would make sense for me to start locking in some T-Bills at 4%+ rates.
But because of the lack of liquidity, I’ll probably still be setting aside cash in Singapore Savings Bonds and savings account (like Trust Bank or DBS Multiplier).
I do want the opportunity to add to positions in the event of any market liquidity event.
The exact proportion of liquid cash, T-Bills or Singapore Savings bonds – is ultimately up to each investor to decide.
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Key Features of T-Bills
To recap the key features of T-Bills, they are:
Backed by the Singapore government, this is as close to risk free as it gets
High short term interest rates
The latest Singapore Savings Bonds yields 3.08% for one year, and the latest Fixed Deposit yields 3.33% for one year.
While T-Bills yield 4.19% for 6 months, and 3.72% for 12 months.
In rapidly rising interest rate climates (like right now), very few products out there will be able to match the interest rates on T-Bills.
Can be bought with CPF-OA (and SRS / Cash)
And interestingly, you cannot use CPF-OA funds to buy Singapore Savings Bonds or Fixed Deposit.
But you can use them to buy T-Bills.
With T-Bills at 4.19%, it’s a healthy 1.69% higher interest than CPF-OA’s 2.5% (after the first $20,000).
How to Buy T-Bills as a Singapore Investor, using Cash, SRS or CPF?
If you’re keen to buy T-Bills, check out our recent article here on how to buy T-Bills using Cash, SRS or CPF.
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