[SINGAPORE] The cut-off yield for Singapore’s latest six-month Treasury bill (T-bill) tumbled to 2.5 per cent, the auction results by the Monetary Authority of Singapore on Thursday (Apr 10) showed.
This marked a drop from the 2.73 per cent cut-off yield offered in the previous six-month auction that closed on Mar 26.
Demand for the latest tranche grew as the auction received S$17.2 billion in applications for the S$7.4 billion on offer, representing a bid-to-cover ratio of 2.32.
In comparison, the previous auction received S$15.8 billion in applications for the S$7.4 billion on offer, translating to a bid-to-cover ratio of 2.14.
Median yield for the latest auction stood at 2.4 per cent, lower than the 2.6 per cent median yield in the previous one.
Average yield declined to 2.1 per cent from 2.54 per cent previously.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
All non-competitive bids were allotted, amounting to S$1.6 billion, which is an increase from S$1.4 billion in the last auction.
Meanwhile, only around 9 per cent of competitive applications at the cut-off yield were allotted, though this was up from 3 per cent at the previous auction.
Cut-off yields this round came in “mildly below expectations”, said OCBC head of foreign exchange and rates strategy Frances Cheung. This suggests a somewhat flush domestic liquidity condition, she added.
“The bid to cover ratio… (reflects) investor demand to lock in the yield which is still higher than longer tenor Singapore dollar swap rates,” she noted.
The market pricing for US Federal Reserve interest rate cuts has surged to 114 basis points by the year’s end, said Eastspring Investments chief investment officer Vis Nayar and chief economist Ray Farris.
Given Fed chairman Jerome Powell’s comments that the Fed “can be patient about easing policy”, Nayar and Farris think that more than four cuts by the end of the year seems “rich”, as this would “require clear evidence that the US economy is in a recession”.
While US Treasuries have rallied, the two-year versus 10-year curve remains at 41 basis points which is not a recessionary level, they said in a research note.
Singapore will issue up to another S$450 billion in government securities, with a parliamentary motion having been passed in November last year to raise the government’s issuance limit to S$1.515 trillion, from S$1.065 trillion previously. The new limit is expected to last until 2029.
