THE cut-off yield on Singapore’s latest six-month Treasury bill (T-bill) rose to 3.04 per cent, auction results released by the Monetary Authority of Singapore on Thursday (Nov 7) showed.
This was up from the 2.99 per cent offered in the previous six-month auction that closed on Oct 24.
Yields were up across the board after Donald Trump recaptured the White House on Wednesday.
Jason Kuan, director of investment research and advisory at CIMB, noted that the US 10-year treasury yields have “climbed quite significantly” after the election.
“While the expectation is for the Federal Reserve to reduce rates by 25 basis points at this meeting, uncertainty has increased on the pace of cuts that are expected in 2025,” he added.
This comes as markets await fiscal policies to be rolled out by Trump when he takes over in 2025, he noted.
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Blerina Uruci, chief US economist at T Rowe Price, believes that inflation will take longer to converge to 2 per cent with higher tariffs and slightly looser fiscal policies under the Republican administration.
“(The) Fed would deliver fewer cuts in 2025 and the long end of the treasury curve should respond with higher-term premia (fiscal plus inflation risks more elevated),” she said.
Uruci added: “Tighter financial conditions would make the Fed more dovish as it worries about the full employment mandate.”
Demand for six-month T-bills dropped in the latest tranche.
The auction received a total of S$12.3 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 1.82.
In comparison, the previous auction received S$13.5 billion in applications for the S$6.8 billion on offer, representing a bid-to-cover ratio of 1.99.
Median yield for the latest auction stood at 2.95 per cent, inching up from 2.93 per cent in the previous auction.
Average yield decreased to 2.72 per cent, from 2.84 per cent previously.
Non-competitive bids totalled S$1.6 billion and were fully allotted. About 2 per cent of competitive applications at the cut-off yield were allotted.
T-bill yields hit a 30-year high of 4.4 per cent in December 2022. Yields stayed elevated during the past two years as the Fed kept interest rates high to combat post-pandemic inflation.
However, when the Fed kicked off its rate-cutting cycle in September with a large cut of half a percentage point, yields fell.
