Yields on six-month T-bills just a whisker shy of 4% in Thursday’s auction
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The auction also saw the largest amount of T-bills being offered in the past decade.
PHOTO: THE BUSINESS TIMES FILE
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SINGAPORE – Yields on Treasury bills (T-bills) are staging something of a comeback after months of gradual decline, going by Thursday’s auction result.
Successful applicants in the auction will get a return of 3.99 per cent a year – up a tad on the 3.89 per cent recorded in the previous auction.
T-bills yields hit a 30-year high of 4.4 per cent last December before a steady decline, falling to 3.88 per cent in the Feb 2 auction and 3.65 per cent on March 16.
Yields have been hovering around the 3.7 per cent to 3.8 per cent range since that March low, but Thursday’s result has pushed them closer to the 4 per cent mark again.
The auction also saw the largest amount of T-bills being offered in the past decade – $5.4 billion worth against applications of $10.3 billion.
That gave a bid-to-cover ratio of 1.91, meaning there was $1.91 worth of applications for every dollar of T-bills offered.
Thursday’s 3.99 per cent result comes amid expectations that the United States Federal Reserve will raise rates at its meeting on July 26.
CME Group’s FedWatch Tool, which gauges US interest rate movements, noted that there is now an 88.7 per cent probability that the Fed will raise rates by 25 basis points.
The US central bank has hiked interest rates 10 times since March 2022, to between 5 per cent and 5.25 per cent.
With six-month T-bills in Singapore now giving investors 3.99 per cent a year, fixed deposits could well be losing their lustre.
OCBC Bank and UOB are offering 2.7 per cent a year on equivalent six-month fixed deposits.
UOB customers need to deposit a minimum of $10,000 to get that rate, while OCBC customers must put in at least $30,000.
Standard Chartered Bank and Citibank have slightly more attractive rates for six-month fixed deposits. StanChart is offering between 3.2 per cent and 3.4 per cent for customers putting in a minimum of $25,000 in fresh funds, while Citibank’s clients can get 3.48 per cent for depositing at least $10,000.
