Latest Singapore six-month T-bill cut-off yield rises to 3.04%

THE cut-off yield on Singapore’s latest six-month Treasury bill (T-bill) rose to 3.04 per cent, based on auction results released by the Monetary Authority of Singapore on Tuesday (Jan 28).

This was up from the 2.99 per cent offered in the previous six-month auction that closed on Jan 16.

Demand for the latest tranche fell.

The auction received a total of S$15.3 billion in applications for the S$7.2 billion on offer, representing a bid-to-cover ratio of 2.13.

In comparison, the previous auction received a total of S$18.4 billion in applications for the S$7.2 billion on offer, representing a bid-to-cover ratio of 2.55.

Median yield for the latest auction stood at 2.97 per cent, up from 2.88 per cent in the previous auction.

Average yield increased to 2.69 per cent, from 2.52 per cent previously.

All non-competitive bids were allotted, amounting to S$2.3 billion, while about 71 per cent of competitive applications at the cut-off yield were allotted.

Analysts are expecting the US Federal Reserve to keep interest rates unchanged at this week’s Federal Open Market Committee meeting.

Vis Nayar, Eastspring Investments’ chief investment officer, and Ray Farris, chief economist at Eastspring Investments, said in a note that markets are now priced for 44 basis points of cuts by the US Federal Reserve.

“We expect Fed chair (Jerome) Powell to stress that the strength of the US economy allows the Fed to remain on hold and data dependent,” they wrote.

Eugene Leow, senior rates strategist at DBS, added: “The evolution of the US economy in the coming quarters is unclear amid Trump policy uncertainties and there is probably less harm in proceeding slower.”

He also pointed out that US dollar yields may “exhibit a downward bias in the short term”.

He explained: “Data does not support further easing at this point, but we think that market participants may now be more concerned about downside risks to the economy down in the line.”

If industries in the artificial intelligence sector “prove to be a drag” on the US economy, Leow thinks “there would be justifications for further easing”, thus weighing on the front of the yield curve.

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.