Quite a number of readers have asked me to continue the T-Bills series of articles, especially with T-Bills yields stabilising around the 3.0% mark.
So that’s exactly what we’ll do today.
3 questions to discuss:
- Estimated yield on the next 6-month T-Bills auction?
- What are the alternatives to T-Bills in this market? Fixed Deposit, Money Market Funds, Bonds?
- Will I buy more T-Bills today?
Estimated yield on the next 6-month T-Bills auction? (2 Jan 2025 Auction)
The next 6-month T-Bills auction is on 2 Jan (Thurs).
As 1 Jan (Wed) is a public holiday, do note that the deadline to apply is:
- 9pm on 31 Dec (Tues) for cash applications (and CPF-OA applications via DBS or OCBC internet banking)
- 9pm on 30 Dec (Mon) for UOB CPF-OA applications

6-month T-Bills yields rose to 3.02% at the most recent auction
In the most recent 6-month T-Bills auction, cut-off yields rose to 3.02% (was 3.00% the previous auction).
Charted below, you can see how T-Bills yields are generally hovering around the 3.0% mark the past couple of auctions.
Because of the Fed rate cuts, yields are down quite a bit from where they were in the first half of the year.

Meanwhile – demand fell from $17.8 billion to $15.8 billion.
If this keeps up, it will be a good sign for T-Bills yields.

6-month T-Bills yields stable on the open market – trading at 3.01%
On the open market – 6-month T-Bills trade at 3.01%, very close to the most recent T-Bills auction yield.

That being said – trading liquidity on the T-Bills is so thin that actually the market pricing is not that useful.
So I would caution against placing too much reliance on market pricing on T-Bills.
Powell has suggested less rate cuts in 2025?
On the interest rate front – Powell in last week’s FOMC indicated that he does not see as many interest rate cuts in 2025.
This led to a sharp repricing in interest rates across the board (as well as stock prices).
Before FOMC, this was the interest rate probabilities:

Post FOMC, these are the latest interest rate probabilities:

You can see how the market has priced in 1 less interest rate cut from the Feds.
For a terminal Fed Funds rate of 4.0% – 4.25%.
By right this should mean higher T-Bills yields, but you can see that there is barely any reaction in market pricing.

In fact you can see how MAS Bills have actually gone down in yields (instead of going up):

Whether this is due to a lack of liquidity, or simply the market ignoring this, is not so clear.
But it suggests don’t get your hopes up for a huge jump in T-Bills yields.
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T-Bills Supply is flattish at $6.9 billion ($6.8 billion at the previous auction)
Generally speaking T-Bills yields is up slightly to $6.9 billion.
This is compared to $6.8 billion the previous auction, so I would not expect a huge impact from this.

Estimated yield of 2.95% – 3.05% on the 6-month T-Bills auction?
Putting everything together.
I’m probably going with an estimated yield of 2.95% – 3.05% for the next 6-month T-Bills auction.
We may see a slight increase in yields, but frankly I would be surprised to see a big jump.
Of course, this is assuming no big swings in demand, as if demand falls off a cliff (for whatever reason) yields will jump.
What are the alternatives to T-Bills in this market? Fixed Deposit, Money Market Funds, Bonds?
Let’s discuss both ends of the barbell:
- The extremely short duration cash equivalents (<6 months), and
- The mid duration bonds (>1 year).
Extremely short duration cash equivalents (<6 months)
Money market fund instruments (like MariInvest) or fintech plays (like Chocolate Finance/GXS/FD)
MariInvest which is a money market fund pays about 3.0% over the past 30 days for me.
As a money market fund investing primarily in MAS Bills, it’s pretty low risk, with competitive yields, with very good liquidity (first $10,000 can be withdrawn instantly, rest is T+1 liquidity).
Alternatively, there’s stuff like Chocolate Finance that even after the drop in rates, will pay 3.6% on the first $20,000.

Syfe Cash+ Guaranteed allows you to access institutional fixed deposit rates.
You can see the latest rates below, and frankly they are not amazing and you’re probably better off with the other instruments on this list.

Mid duration bonds (>1 year)
Short duration bond funds
As shared in previous articles, I quite like short duration bond funds (2 year duration or so) given where we are.
I shared my thought process in a previous article, which I extract loosely below:
My personal view, is that it’s all about risk-reward.
It is for this exact reason that I advocate building exposure at the short duration bond space, and not the long duration bond space.
If I buy bonds with a 2 – 3 year duration.
If there is indeed a soft landing, default rates will be close to zero, so I collect my 5%+ yield the next few years.
Sure if interest rates go to 5.0% I may suffer capital losses, but given the short duration nature of the bonds those losses will be manageable, and go away the longer I hold the bond funds.
If there is a hard landing, interest rates will get slashed, and there is capital gains potential on these bonds.
The complexity is that in a recession there is default risk for the underlying bonds, but I would say if you’re playing in Investment Grade credit I *think* the defaults will be manageable barring a bad recession.
But of course there is risk, and there is no free lunch in this world.
From a portfolio perspective, the way I see it, with the Feds on a rate cut cycle, it makes sense to shift some funds out of cash and into short duration bond funds.
But I want a mix of both short term cash instruments (<6 month duration) and short term bonds, to cater for a wide range of outcomes.

The US 2 year yield trades at about 4.4% today, so even if you stick purely to investment grade credit you’re probably looking at a 5-6% yield, even after hedging back to SGD.
I think that’s a pretty decent option in today’s market.
Now to be clear I’m not saying to park all of your liquid cash into bonds – because there are still risks involved.
But it may make sense to put a certain percentage of your cash into bond funds, to lock in a longer duration and higher yield.
At least – that’s what I’ve been doing with my own cash.
Will I buy T-Bills?
Will the recent pickup in T-Bills yields.
I think T-Bills are back to being competitive as a cash management product again.
Main benefit being that T-Bills are risk free, and it’s a park and forget for 6 months kind of instrument.
SGD as well – so no FX risk.

The drawback is (and always has been) that you cannot get liquidity back on short notice.
Which is why you cannot park all of your cash in T-Bills, and you need to have some funds in other instruments like UOB One, Singapore Savings Bonds, and so on.
Personally I’ve been splitting my cash on both ends of the barbell – short term parked primarily in UOB One, SSBs, and Money Market Funds.
And mid term parked in bond funds / bonds.
I’ve generally been letting my T-Bills roll off and using the funds to invest into markets (increasing risk exposure in anticipation of and post Trump win).
But now my risk exposure is at a place where I am comfortable where it is again (see my full portfolio shared on FH Premium).
So I might just apply for T-Bills again at this auction.
Would love to hear what you think though!
Will you apply for T-Bills? Or park your cash elsewhere?
Deadline to apply for the T-Bills auction on 2 Jan (Thurs)
The next 6-month T-Bills auction is on 2 Jan (Thurs).
Deadline to apply is therefore:
- 9pm on 31 Dec (Tues) for cash applications (and CPF-OA applications via DBS or OCBC internet banking)
- 9pm on 30 Dec (Mon) for UOB CPF-OA applications

Launch of Dividend Investing MasterClass – Massive Launch Discount!
Just a quick update that I’ve been working on this the past 3 years, and it’s finally done – the Dividend Investing MasterClass.
The Dividend Investing MasterClass is a complete all in one course.
That teaches you the fundamentals on constructing a dividend portfolio – to achieve the cash flow you need to achieve financial freedom, while managing risk.
Whatever your stage of life, if you’ve ever wanted to build a dividend portfolio, this is the course for you.
We’re launching with a special launch promo – a huge discount from the official course price, and complimentary access to FH Premium thrown in!
Check out more details here.
Do I loose Dec interest from CPF if I apply the bill on 31st Dec from CPF OA?