T-Bills Auction on 30 March – Estimated Yield of 3.7%? Fixed Deposit or Singapore Savings Bonds a better buy? Must buy with CPF-OA?



Well, that a 2 weeks it has been!

With 3 bank failures, Credit Suisse being bought out by UBS, and Feds saying no more rate hikes for 2023.

All while 6 month T-Bill yields plunged to 3.65%.

So I wanted to discuss 3 key questions:

1) What is the estimated yield on the next 6 month T-Bills Auction?

2) Should you buy T-Bills, Fixed Deposits, or Singapore Savings Bonds at this stage of the cycle?

3) Should you still buy T-Bills with CPF-OA?


What is the estimated yield on the next 6 month T-Bills Auction? (30 March 2023)

6 month T-Bills – 3.71%

6 month T-Bills trade at 3.71% on the open market.

MAS Bills – 3.93%

While the 12 week MAS bills trade at 3.93%.

Latest T-Bills auction closed at 3.65%

For reference, the most recent T-Bills auction closed at 3.65%.

This was the lowest yield since October 2022, and came as a shock to many.


You can see how the sharp drop in yields came despite application amounts staying relatively steady:

No more interest rate hikes in 2023?

In case you missed it, Jerome Powell also announced the end to the rate hike cycle at this week’s FOMC.

I extract the key quote from Powell below:

At today’s meeting, the committee raised the target range for the federal-funds rate by a quarter percentage point, bringing the target range to 4.75 to 5 percent, and we are continuing the process of significantly reducing our securities holdings. Since our previous FOMC meeting, economic indicators have generally come in stronger than expected, demonstrating greater momentum in economic activity and inflation. We believe, however, that events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes. It is too soon to determine the extent of these effects, and therefore too soon to tell how monetary policy should respond. As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation; instead, we now anticipate that some additional policy firming may be appropriate. We will closely monitor incoming data and carefully assess the actual and expected effects of tighter credit conditions on economic activity, the labor market, and inflation, and our policy decisions will reflect that assessment.

Basically, no more rate hikes in 2023, until the Feds assess the true impact of the bank failures the past 2 weeks.

What about interest rate cuts?

On rate cuts though, Powell doesn’t see any rate cuts in 2023.

This is completely contrary to what the market is pricing in.

So you now have a situation where the Feds expect to hold interest rates steady at 4.75% – 5.00% for the whole of 2023.

While the market is pricing in 3 interest rate cuts by end of 2023:

Suffice to say, somebody is going to be very wrong here.

Either the Feds are going to be proven very wrong and be forced to cut interest rates soon.

Or the market is going to be very wrong and force a sharp repricing across the board.

I have my own views on this, but for now let’s just say that there is a fair bit of uncertainty on the path for interest rates going forward.

Because of this, locking in interest rates may not be the worst thing in the world.

Estimated yield of the next T-Bills Auction – 3.7% – 3.8%

Put all the above together, and you have significant uncertainty over the yield on the next T-Bills auction.

Gun to my head, I’m going to say 3.7% – 3.8%.

But plus or minus 0.1%.

Must submit competitive bid?

As always, I do suggest submitting a competitive bid though.

You don’t want a situation where there is a sudden risk-off event (like the previous auction).

And you’re forced to buy T-Bills even at very low yields.

So yeah… you do non-competitive (or a low-ball competitive bid) at your own risk.

Should you buy T-Bills, Fixed Deposits, or Singapore Savings Bonds at this stage of the cycle?

Given that the Feds have said no more interest rate hikes in 2023.

Does it pay to start locking in interest rates longer term?

Best Fixed Deposit Rates – 4.00%

In my recent Fixed Deposit article I shared that the best fixed deposit interest rates are:

  • If you are okay with a foreign bankState Bank of India offers 4.00% for 12 month fixed deposit with minimum of $50,000
  • If you want a local bankUOB offers 3.85% for 6, 10 or 12 month fixed deposit with minimum of $50,000

Unfortunately UOB has slashed their interest rates down to 3.55% now.

This is in line with what’s been happening with most other banks after their Fixed Deposit promotion period.

You can still get 4.00% with State Bank of India though.

Pretty good deal given the drop in T-Bills and Fixed Deposit rates across the board.

Singapore Savings Bonds Interest Rates

Interestingly, with the events of the past 2 week, I think you might see the April Singapore Savings Bonds become quite popular.

With 3.01% for the first 6 years, stepping up to 3.15% over 10 years.


This allows you to lock in interest rates for up to 10 years, just in case the market is right and interest rates are going to be cut aggressively.

So for those who are keen, you might want to consider putting in an application before the 28 March (9pm) deadline:


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Bidding / Allotment strategy for Singapore Savings Bonds

An interesting question I received was on bidding strategy.

The past few Singapore Savings Bonds all saw 100% allotment because T-Bills and Fixed Deposit rates were very high.

Now that T-Bills and Fixed Deposit rates have come down sharply, we might see a meaningful pickup in Singapore Savings Bonds demand.

What kind of allotment will we see for the April Singapore Savings Bonds?

I thought about it for a bit, and the answer I must admit – is I have no clue.

What I would say is that if you’re submitting something below $40,000, there’s probably a good chance of meaningful allotment.

But if you want to apply for $200,000 at one go, I’m not sure.

T-Bills, Fixed Deposits, or Singapore Savings Bonds at this stage of the cycle?

Just to share how I am doing it.

I’ve maxxed out my Singapore Savings Bonds allotment ($200,000).

I use Singapore Savings Bonds mainly for liquid emergency funds, with the optionality of holding long term if interest rates get slashed rapidly.

While it’s ultimately a balance between yield and liquidity for the rest of the cash.

Split between a mix of T-Bills, Fixed Deposits, and high yield savings accounts like UOB One.

T-Bills a must buy with CPF-OA?

The final question here – does it still make sense to buy T-Bills with CPF-OA moneys?

T-Bills auction date on 30 March 2023 is very close to the end of the month…

Do note that if you buy T-Bills with CPF-OA, the moneys are deducted from your CPF-OA 1 day after the auction date.

Which means for the 30 March 2023 auction, they are going to be deducted on 31 March 2023.

This means you will lose the CPF-OA interest for the whole month of March 2023.

While the T-Bills interest only starts on the 4 April 2023 issue date.

Because of this I can see why CPF-OA buyers might want to skip this round of T-Bills, and go for the 13 April T-Bills instead.

But hey – ultimately your call.

Just a side note that if you don’t want to bother with bidding and timing, and want something fuss free.

You can put CPF-OA moneys into a fixed deposit with OCBC.

Unfortunately the tenure is only 5 months, and interest is on the low side at 3.55%.


As always, this article is written on 24 March 2023 and will not be updated going forward.

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  1. Hi FH,

    Split between a mix of T-Bills, Fixed Deposits, and high yield savings accounts like UOB One.

    Why no money market funds
    Any concerns?

    • With MMFs you do need to do a bit of due diligence to ensure that you are buying the right underlying funds to suit your risk appetite and holding period. And sometimes in periods of market stress bid-ask spread can blow out as investors rush to pull their funds. So a bit more caution is warranted with MMFs.

  2. Maybe FH has products that produce better returns with better liquidity? Nothing stopping you from using it. I still have some money in Fullerton SGD paying up to 5%.

    • Yup, really depends on individual risk appetite. They’re perfectly fine as long as one is aware of the risks.

  3. Hi FH.
    Just to clarify if one is buying T-Bill using CPF-OA for the coming T-Bill. You state that ‘This means you will lose the CPF-OA interest for the whole month of March 2023’. Is the interest lost only on the amount invested for the purchase of the T-Bill or interest lost for the remaining outstanding balance of one’s CPF-OA for that particular month? This has been nagging me as I am unsure about the lost interest on WHAT amount? TQ

    • No just to clarify – you only lose CPF-OA interest on the amount that you take out of CPF-OA to buy the T-Bills.

      The rest is not affected. 🙂


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