So the latest T-Bills auction results are out!
And interest rates are going up again.
Cut off yield is 3.98% (vs 3.93% the previous auction).
In my weekend article I estimated a range of 3.85% – 4.00%, so this is on the higher side on the range (which is good news).
Interest Rates for T-Bills are on an uptrend
You can see the trend for the 6 month T-Bills interest rates over the past 6 months:
Interest rates peaked at 4.4% on 8 December 2022.
Before declining as low as 3.88% on 2 February 2023.
Since the 2 February 2023 auction though, interest rates have started to pick up, closing at 3.98% for the latest T-Bills auction.
This is despite T-Bills application amounts picking up
Interestingly, this pick up in interest rates is despite an increase in the T-Bills application amounts.
Application amounts increased from from $11 billion the previous auction to $13 billion this auction.
That’s a pretty hefty 18% increase in application amounts, and yet interest rates still went up!
Bidders are becoming more savvy?
Looking more closely at the numbers, it seems like bidders are becoming more “savvy”, and putting in higher bids.
Median yield has gone up a whole lot to 3.88%, while average yield is on the high side at 3.58%.
This is quite a bit higher than the recent auctions:
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Allotment Statistics for T-Bills
Non-competitive applications see 100% allotment again.
Anyone who applied non-competitive would get 100% allotment at 3.98%.
Anyone who applied competitive below 3.98% would get 100% allotment.
Anyone who applied competitive at 3.98% or above would get 0% allotment.
That said I still recommend putting in a competitive bid though, just to protect yourself against a freak result.
T-Bills a better buy than Fixed Deposit soon?
For comparison, after the February promotions most of the banks revised their fixed deposit rates down sharply.
As of today, the best Fixed Deposit is 4.00% with HSBC for 7 months.
With a minimum of $30,000.
Given that T-Bills interest rates are starting to pick up again, I think you may well see T-Bills with higher interest rates than Fixed Deposits very soon.
What did I do – did I subscribe for the T-Bills?
Most of my spare cash is tied up in a mix of fixed deposit, T-Bills and Singapore Savings Bonds.
I actually bought this latest round of T-Bills using CPF-OA funds online (my CPFIS account is with DBS).
I applied competitive using 3.85% (the low end of my estimated range) – because frankly when you’re using CPF-OA anything above 3.00% is a good deal already.
Pretty pleased with the result in any case – 3.98% is a good yield compared to CPF-OA’s 2.5%.
Didn’t even have to queue at the bank too!
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