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INTEREST in Singapore’s Treasury bills (T-bills) surged over the past two years, as rising interest rates elevated demand for yield and stable returns.

T-bills also found favour as investors sought the safety of the government-backed, fixed-income instrument – which carry little to no default risk – amid heightened global macroeconomic uncertainty.

But with yields gradually falling after the US Federal Reserve in September 2024 cut interest rates for the first time in more than four years, demand has been dwindling.

The cut-off yield on Singapore’s latest six-month T-bill was 3.04 per cent, based on auction results released by the Monetary Authority of Singapore on Jan 28.

Indeed, cut-off yields for six-month T-bills have fallen a long way from the peak of 4.4 per cent in the auction on Dec 8, 2022.