SINGAPORE: Yields on Singapore’s six-month Treasury bill (T-bill ) fell to a more than two-year low on Thursday ( Sep 26 ), with the latest auction reporting a cut-off yield of 2.97 per cent per annum.
This is the lowest returning on a six-month T-bill since August 2022, which is not surprising for industry observers given the US Federal Reserve’s announcement last month of its first charge cut in four times.
T-bills are short-term loan securities issued and backed by the Singapore state, with maturities of one month or less.
They are vulnerable to fluctuating interest rates. When the Fed embarked on a rate-hike contest to curb inflation in 2022, yields , on the six-month T-bill went on a rapid rise , to hit , a multi-decade deep of 4.4 per share on Dec 8 that time. Since then, profits have typically increased by more than 3.5 %.
However, provides dropped quickly as the possibility of US price cuts approached.
They initially fell below 3.5 per cent on Aug 1, with produces of 3.4 per share. Following six-month T-bill transactions saw solid declines in profits – from 3.34 per share on Aug 15 to 3.13 per share on Aug 29 and 3.1 per cent on Sep 12.
According to DBS ‘ senior rates strategist Eugene Leow, “T-bill rates ( have ) taken into account the likelihood of Fed easing in the upcoming months and have drifted lower even before the first cut.”