Will T-Bills yields keep dropping or go back up to 3.0%? Are fixed deposits and money market funds a better buy than T-Bills now?

As you probably already know by now.

6-month T-Bills yields fell to a dismal 2.56% at the most recent auction.

At 2.56% – frankly there are a lot of options out there competitive with or offering better yields than T-Bills.

So… is there any chance we see demand for T-Bills drop and yields pick up?

3 questions I wanted to discuss:

1. Estimated yield on the next 6-month T-Bills auction?
2. What are the alternatives to T-Bills in this market? Fixed Deposit, Money Market Funds, Bonds?
3. Will I buy more T-Bills today? Where to park cash for the highest yield today?

Estimated yield on the next 6-month T-Bills auction? (26 Mar 2025 Auction)

The next 6-month T-Bills auction is on 26 Mar (Thurs).

This means that the deadline to apply is:

• 9pm on 25 Mar (Wed) for cash applications (and CPF-OA applications via DBS or OCBC internet banking)
• 9pm on 24 Mar (Tues) for UOB CPF-OA applications

6-month T-Bills yields dropped to 2.56% at the most recent auction (vs 2.75% at the previous auction)

In the most recent 6-month T-Bills auction, cut-off yields fell to 2.56% (was 2.75% the previous auction).

You can see from the chart below how this is by far the lowest yields in the past 24 months.

Most definitely not a good sign for investors looking for yield.

Demand for T-Bills remains very high at $19.8 billion (vs $20.1 billion the previous auction)

Part of the reason why – because demand for T-Bills remains very high.

We see $19.8 billion in application amount at the most recent auction.

This is only down slightly from the previous auction ($20.1 billion).

You can see how elevated demand is when compared to the past 24 months.

Will demand for T-Bills stay high, or will it drop?

The big wildcard is where demand will come in at the next T-Bills auction.

With the sharp drop in interest rates to 2.56% – will we still see strong demand, or will we see investors start to shift cash elsewhere?

Note that at 2.56% it no longer makes sense to park CPF-OA in T-Bills, as after accounting for lost interest you’re actually better off just leaving in CPF-OA.

This is a big wildcard, and your guess is as good as mine here.

Big change in rate cut expectations for 2025 – 3 cuts priced in instead of 2

A big reason behind the drop in interest rates – is due to the market pricing in more interest rate cuts going forward.

Because of recent US growth and inflation data coming in weak, and growth fears arising from Trump tariffs and DOGE cuts.

The market is now pricing in 3 interest rate cuts in 2025.

Because of that we have seen yields go down the past few weeks, although it looks like the decline may stabilise around current levels (for now).

6-month T-Bills yields stable on the open market – trading at 2.57%

On the open market – 6-month T-Bills trade at 2.57%, which is actually very close to the latest 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.

T-Bills Supply is down slightly to $7.4 billion ($7.5 billion at the previous auction)

T-Bills supply is dipping slightly to $7.4 billion down slightly from the $7.5 billion in the previous auction.

Not a good sign – we would want to see higher auction amounts if we want to see higher yields.

Estimated yield of 2.50% – 2.60% on the 6-month T-Bills auction?

Putting everything together.

Extremely high demand for T-Bills, coupled by weak US data leading to the market pricing in more rate cuts – that’s not a good combination for interest rates.

The big wildcard is whether demand for T-Bills will drop – given the sharp drop in yields.

Will investors decide to go with alternative options instead, and will we see demand drop?

No easy answers here.

That said, recent market pricing seems to have stabilised around current levels, without any big shift in market pricing on interest rate cuts in 2025.

All things considered – I think T-Bills yields probably stabilise around the previous auction price of 2.56%.

I’m probably going with an estimated yield of 2.50% – 2.60% for the next 6-month T-Bills auction.

What are the alternatives to T-Bills in this market? Fixed Deposit, Money Market Funds, Bonds?

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Comparing interest rates for T-Bills vs Fixed Deposits vs Syfe Cash+ Guaranteed across all tenures (Mar 2025)

I’ve compared the latest T-Bills auction yields against other options in the market today.

You can see how, with the recent drop in yields – the 6-month T-Bills are no longer that attractive.

Both Fixed Deposit, Syfe Cash+ and Money Market Funds look decently attractive when compared with T-Bills.

	3 months	6 months	12 months	Risk Free
T-Bills yields	NA	2.56%	2.56%	Yes
Fixed Deposit (direct to bank)	2.70%	2.70%	2.60%	Yes (if below $100,000 SDIC limit)
Syfe Cash+ Guaranteed (Institutional Fixed Deposit Rates)	2.70%	2.70%	2.30%	No
Money Market Funds	~3.0%			No

Where would I put my cash today?

With the recent drop in yields – the 6-month T-Bills are no longer that attractive in my view.

So let’s explore some alternatives below.

Singapore Savings Bonds suddenly look very attractive

You know what – the latest Singapore Savings Bonds yield 2.73% for the first year.

Risk free, can be withdrawn any time, and can be held up to 10 years.

And 2.73% is actually higher than the market yield on the T-Bills.

Frankly this is not too bad and competitive with the latest 6 or 12 month Fixed Deposit rates.

Pretty much a no brainer if you want an alternative to T-Bills

Deadline to apply for Singapore Savings Bonds is 9pm on 25 March 2025

Note that the deadline to apply for Singapore Savings Bonds is 9pm on 25 March 2025

Given the sharp drop in T-Bills yields, we may actually see strong demand for the Singapore Savings Bonds.

So it’s not easy to call what kind of allotment limits we will see.

UOB One, DBS Multiplier, OCBC 360 (High Yield Savings Account)

This one is self-explanatory, so I won’t dwell on it.

A high yield savings account like UOB One pays 4.0% blended yield on $150,000, that is fully liquid and can be withdrawn any time.

If it works for you, high yield savings accounts like these are probably the best option.

If they don’t work (whether you can’t meet the requirements or don’t have enough spare cash), then just use the other options on this list.

Money market fund instruments (like MariInvest) or fintech plays (like Chocolate Finance/GXS/FD) on the short end

Alternatively there is MariInvest which is a money market fund that pays about 3.0% over the past 30 days for me.

It’s definitely come down because of the rate cuts, but for something that is pretty low risk and with good liquidity (first $10,000 can be withdrawn instantly, rest is T+1 liquidity), it’s a decent option in my view.

GXS is paying 2.98% for 3 months:

PIMCO GIS Income Fund via Maribank

For more duration, you can consider buying a bond fund.

One example is the PIMCO GIS Income Fund, that you can access via Maribank.

It’s known as Mari Invest Income, and is by invitation only for now.

I wrote a detailed review so do check it out if you are keen.

Bottom line is that these bond funds are quite a complex instrument, and not for everyone.

Because if interest rates go up, you can suffer mark to market capital losses.

And there is no way to hold to maturity as the bond fund will automatically reinvest proceeds.

So effectively there is some timing element involved here, in that you want to buy the fund when yields are high, and sell when yields are low, and if you do it the other way around you could see mark to market capital losses.

Best used only if you have a mid to longer term investment horizon.

Will I start buying T-Bills again? Where to park cash for the highest yield today?

With the recent drop in T-Bills yields.

I don’t think T-Bills are that attractive any more to be honest.

I’ll probably skip T-Bills and park my short term cash in money market funds for now.

But that’s just how I see it, and I would love to hear what you think.

Estimated yield on the next 6-month T-Bills auction? (26 Mar 2025 Auction)

The next 6-month T-Bills auction is on 26 Mar (Thurs).

This means that the deadline to apply is:

• 9pm on 25 Mar (Wed) for cash applications (and CPF-OA applications via DBS or OCBC internet banking)
• 9pm on 24 Mar (Tues) for UOB CPF-OA applications

This post is written on 21 March 2025 and will not be updated going forward. My latest views on markets, my Stock watchlist and full Personal Portfolio, are shared on FH Premium.