SINGAPORE’S latest one-year tranche of Treasury bills (T-bills) is offering a cut-off yield of 2.71 per cent, auction results released by the Monetary Authority of Singapore (MAS) indicated on Thursday (Oct 17).
This is down 0.67 percentage point from the 3.38 per cent offered in the auction for the previous one-year tranche in July.
Demand fell in the latest tranche. The auction received a total of S$14.7 billion in applications for the S$5.2 billion on offer, representing a bid-to-cover ratio of 2.83.
In comparison, the previous auction received S$15 billion in applications for the S$5.1 billion on offer.
Median yield in the latest auction stood at 2.6 per cent, from 3.16 per cent in the previous auction.
Average yield fell to 2.47 per cent, from 2.84 per cent previously.
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Non-competitive bids totalled S$826.5 million and were fully allotted.
About 15 per cent of competitive applications at the cut-off yield were allotted. Those who specified a lower yield were fully allotted, and those who specified a higher yield were not.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022. Yields had stayed elevated during the past two years as the US Federal Reserve kept interest rates high to combat post-pandemic inflation.
However, when the Fed kicked off its rate-cutting cycle last month with a large cut of half a percentage point, yields fell. The six-month T-bill cut-off yield fell to 2.97 per cent in the first auction after the rate cut.
Analysts had previously said that yields are likely to grind lower over the next few months as they await further rate cuts by the central bank.
At the September rate decision, policymakers had pencilled in a total of 50 basis points (bps) of cuts over the two remaining rate decisions this year, suggesting either one more large cut, or two smaller cuts of 25 bps.
