Next T-Bills Auction on 8 June – Estimated yield of 3.85%? Better buy than Fixed Deposits and Singapore Savings Bonds?

You guys know my views – I think how the market is positioned today, T-Bills are a better place to park cash than Fixed Deposits because of the higher yield.

I have quite a bit of cash sitting in Fixed Deposit that matured this week.

And I would be putting some of it into T-Bills for the upcoming 8 June auction.

So I wanted to take some time to discuss estimated yields on the next 6 month T-Bills.

6 month T-Bills trade at 3.81%

First off – the 6 month T-Bills trade at 3.81% on the open market.

12 Week MAS Bills closed at 4.21%

The most recent auction for the 12 week MAS Bills shot up to 4.21%.

This was quite a big jump from the previous auction (4.08%) – and does indicate an uptrend in yields.

Here’s the trading price in MAS Bills, and you can see the uptrend over the past few weeks.

Most Recent T-Bills Auction closed at 3.85% yields

The most recent 6 months T-Bills Auction closed at 3.85%.

You can see this charted below.

Yields are firmly down from the late 2022 highs, but have settled into a 3.7 – 3.9% range since March.

T-Bills application amounts is a wildcard

What is not so clear is whether demand for T-Bills will go up.

Now that Fixed Deposit interest rates have been revised down sharply.

And Singapore Savings Bonds are not all that attractive for their short term interest rates.

We may see more investors switch back to T-Bills as a place to park cash.

Demand has been going up the past few auctions, which is a bit of a wildcard.

Next T-Bills Auction – Estimated yields of 3.80% – 3.90%?

In any case, putting everything together.

I’m going to go out on a limb and say maybe an estimated range of 3.80% – 3.90% for the next 6 month T-Bills auction.

As always, I encourage investors to submit a competitive bid to avoid any freak results in cash yields plunge.

How will I be bidding on the next T-Bills Auction?

I have quite a lot of money to put into the T-Bills, so I may actually break up my competitive bids.

For example $50,000 at 3.70%, another $50,000 at 3.80% and so on, to spread my risk around a bit in case we get a freakish result (illustrative numbers only).

For those doing competitive bidding though, you generally want to make the bid as close to the cut off date as possible.

This gives you time to watch how the market and interest rates play out, which allows you to adjust your bid accordingly.

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Best Fixed Deposits yield 3.55% – T-Bills a better buy?

Bank fixed deposit rates are pretty dismal these days.

You’re looking at 3.1% from UOB, and 3.0% from OCBC.

The best fixed deposit I could find was RHB Bank.

Offering 3.50% for a 6 or 12 month Fixed Deposit, going up to 3.55% if you’re premier banking.

Given where I expect T-Bills yields to come in for the next auction, I don’t think it’s much of a competition really.

I would be buying T-Bills over Fixed Deposit here unless something changes materially.

Singapore Savings Bonds vs T-Bills

Latest Singapore Savings Bonds interest rates are below.

You’re looking at 2.76% for the first year, stepping up to 2.82% over 10 years.

Like I said, not super attractive, unless you want to lock in interest rates for up to 10 years.

For short term interest rates, T-Bills are probably your best bet for now.

Singlife Secure Saver III – 4.1% p.a. for 2 years

For those who want to lock in yields a bit longer.

One of the Patreons shared about Singlife Secure Saver III.

This will be opening next week, and you have to buy it from Singlife.

But it’s basically a 2 year endowment plan that pays 4.10%.

SDIC insured as well, so risk free as long as you keep below the SDIC limits.

So for those who want to lock in something longer term, you can consider endowments like this.

I will be buying T-Bills over Fixed Deposit / Singapore Savings Bonds

In any case, I will be putting money where my mouth is, and I will be applying for the next T-Bills auction with the money I have from matured Fixed Deposits.

I did set aside some of those case which I used to buy REITs this week (full details on Patreon), but the rest would be going into T-Bills.

This article was written on 1 June 2023 and will not be updated going forward. For my latest up to date views on markets, my personal REIT and Stock Watchlist, and my personal portfolio positioning, do sign up as a Patreon.

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