THE cut-off yield on the latest Singapore six-month Treasury bill (T-bill) slid to 3.4 per cent, based on auction results released by the Monetary Authority of Singapore (MAS) on Thursday (Aug 1).
This was a 0.24 percentage point drop from the 3.64 per cent offered in the previous six-month auction, which closed on Jul 18.
Demand rose in the latest tranche, which garnered a total of S$18 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 2.65.
The previous auction received S$15.7 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 2.3.
The median yield in the latest auction stood at 3.3 per cent, down from 3.5 per cent in the previous auction. Average yield, meanwhile, fell to 2.85 per cent from 2.97 per cent previously.
All non-competitive applications totalling S$2.6 billion were allocated in the latest auction. Some 43 per cent of competitive applications were allotted at the cut-off yield.
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Eugene Leow, senior rates strategist at DBS, said that the six-month cut-off yield is “very low” and close to the one-year T-bill cut-off yield, which stood at 3.38 per cent at the latest auction on Jul 25.
“There seems to be a fear-of-missing-out grab for yield following increasing signs that the Fed may be about to embark on an easing cycle,” he said.
On Wednesday, US Federal Reserve chief Jerome Powell signalled that policymakers may lower interest rates at their next meeting in September as inflation rates fall towards the central bank’s 2 per cent target.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022 amid a high interest rate environment.
