Singapore Treasury bills (T-bills)

[reddevil0728]

it does move the needle and it can be easily observed by the yield during auction and subsequent yield.

US interest rate was still moving up but T-Bill has been stagnate for quite some while.

We can’t be certain who moved the needle

 

[sky1978]

most if not all here does not know how to put a competitive bid. Rightfully, bids should only open to the primary dealers and institutional investors. Retail just bids the amount they would like to be allocated.

To allow retail to bid for T-Bill directly will only drag down the yield and it benefits the issuers(the gov) greatly.

When it is a discriminatory price auction bid, people will not anyhow enter a bid. If the bidder puts in 2% and wins the bid, they will get it at 2% despite the COY being much higher. So everyone along the chain until the cut-off rate pays whatever they put in their bid rather than following the highest COY. As per the below report, there is still a whole list of countries using discriminatory auctions, so it is not something uncommon. Regardless of retail or institutional investors, there will still be bidders putting in low bids, MAS bill auction also reflects a similar pattern because the average yield can also be quite far from COY.

https://www.econstor.eu/bitstream/10419/141995/1/796715769.pdf

If retail bidding drags down the yield, especially under uniform price auction, then it shows that the market lacks the required liquidity which may be true. In general, the govt doesn't need any debt (other than the longer-term infrastructure program) to fund budget spending which is quite different from many others, the main purpose of debt issuance is to provide liquidity and benchmarking for the debt market. In a high-interest rate environment, the problem becomes whether the income generated from issuing more debt can offset the interest cost.

Where do you read that US Treasury bill auction is different from SG ones? I think they are similar.

Yes, you are right. They moved to uniform auction sometime back in 2007. But their liquidity is huge, so it probably has little impact. For smaller countries, any sudden big inflow of funds can move the yield by a lot. I suspect that nowadays, the T-bill markets are driven by retail investors, those money market funds which I am looking at, almost all are buying into MAS bills which have a much higher yield compared to the 6-month T-bills. Back in early 2022, the spread between 3 months MAS bills and 6 months T-bills was around 5 to 10 bps, now it is much wider at 30bps and that is already taking into consideration that the issue size already increased from 4bil++ to 6bil++.

I think our market lacks liquidity depth despite the high volume of secondary transactions going on. The 1/3/6 months SORA are around 3.5%/3.6%/3.7%, but 3 and 12-week MAS bills are still being auctioned at more than 3.9%.

 

[sky1978]

it does move the needle and it can be easily observed by the yield during auction and subsequent yield.

US interest rate was still moving up but T-Bill has been stagnate for quite some while.

How our interest moves depends a lot on liquidity flowing in and out of the country and how much liquidity is drained out from the banking system. Just looked at the amount of 4 and 12-week MAS bills that are currently in issue. Cutting the supply of MAS Bills and T Bills by half or increasing by 50%, the interest rate will have a big movement.

SG and US interest rates historically move in the same direction but not at a similar quantum. When the US hikes rates, liquidity flows out of SGD, so SGD rates simply need to move to a level where it can find an equilibrium (that is stable and manageable on the FX side) and that rate does not need to match the USD rate. China and Japan keep both their rates low despite the Fed hike, so their consequence is having a depreciating currency which they can afford but we can't because we need a stronger currency to manage inflation.

 

[wenguang]

Hi, any idea if cpf oa is not enough for the tbill deduction, i miscalculated, the mortgage deduction happens before the tbill deduction. Today tbill deduction from cpf oa deduct oa to 20k. I have like $650 left cannot be deducted to the full tbill sum.

 

[IronMan123]

Hi, any idea if cpf oa is not enough for the tbill deduction, i miscalculated, the mortgage deduction happens before the tbill deduction. Today tbill deduction from cpf oa deduct oa to 20k. I have like $650 left cannot be deducted to the full tbill sum.

For DBS customers, there will be a 0.05% of penalty for unsuccessful investment amount debited from your DBS bank acc.
I know this because last time was apply t bills at the bank branch and have to sign a form to declare this.
Again, things may be change as currently we are allowed to apply online and the T&Cs may be change as well.

 

[wenguang]

For DBS customers, there will be a 0.05% of penalty for unsuccessful investment amount debited from your DBS bank acc.
I know this because last time was apply t bills at the bank branch and have to sign a form to declare this.
Again, things may be change as currently we are allowed to apply online and the T&Cs may be change as well.

Ic, not so bad. Lets see how it goes

 

[koster]

Hi, any idea if cpf oa is not enough for the tbill deduction, i miscalculated, the mortgage deduction happens before the tbill deduction. Today tbill deduction from cpf oa deduct oa to 20k. I have like $650 left cannot be deducted to the full tbill sum.

Are u on DBS? I also miscalculated as my applied amt could not make up for the 20k balance. I just checked and nothing was deducted from my cpf oa today. Suspect the entire transaction didn't go thru without any allocation.

 

[wenguang]

Are u on DBS? I also miscalculated as my applied amt could not make up for the 20k balance. I just checked and nothing was deducted from my cpf oa today. Suspect the entire transaction didn't go thru without any allocation.

Yup, dbs, cpf oa was deducted main bulk of it today. Left 630 unable to deduct

 

[koster]

Yup, dbs, cpf oa was deducted main bulk of it today. Left 630 unable to deduct

Thanks. My UOB did not deduct anything as of now. Hope I still get allocated part of it.

 

[andyhtc]

Hi, any idea if cpf oa is not enough for the tbill deduction, i miscalculated, the mortgage deduction happens before the tbill deduction. Today tbill deduction from cpf oa deduct oa to 20k. I have like $650 left cannot be deducted to the full tbill sum.

Top up your CPF OA?

I thought the DBS portal would calculate how much you can invest at most.

 

[fr33d0m]

When it is a discriminatory price auction bid, people will not anyhow enter a bid. If the bidder puts in 2% and wins the bid, they will get it at 2% despite the COY being much higher. So everyone along the chain until the cut-off rate pays whatever they put in their bid rather than following the highest COY. As per the below report, there is still a whole list of countries using discriminatory auctions, so it is not something uncommon. Regardless of retail or institutional investors, there will still be bidders putting in low bids, MAS bill auction also reflects a similar pattern because the average yield can also be quite far from COY.

https://www.econstor.eu/bitstream/10419/141995/1/796715769.pdf

If retail bidding drags down the yield, especially under uniform price auction, then it shows that the market lacks the required liquidity which may be true. In general, the govt doesn't need any debt (other than the longer-term infrastructure program) to fund budget spending which is quite different from many others, the main purpose of debt issuance is to provide liquidity and benchmarking for the debt market. In a high-interest rate environment, the problem becomes whether the income generated from issuing more debt can offset the interest cost.



Yes, you are right. They moved to uniform auction sometime back in 2007. But their liquidity is huge, so it probably has little impact. For smaller countries, any sudden big inflow of funds can move the yield by a lot. I suspect that nowadays, the T-bill markets are driven by retail investors, those money market funds which I am looking at, almost all are buying into MAS bills which have a much higher yield compared to the 6-month T-bills. Back in early 2022, the spread between 3 months MAS bills and 6 months T-bills was around 5 to 10 bps, now it is much wider at 30bps and that is already taking into consideration that the issue size already increased from 4bil++ to 6bil++.

I think our market lacks liquidity depth despite the high volume of secondary transactions going on. The 1/3/6 months SORA are around 3.5%/3.6%/3.7%, but 3 and 12-week MAS bills are still being auctioned at more than 3.9%.

in theory, yes. but in Singapore, not true.

There are very few reasons for the primary dealers or institutional investors to put up a bid. The debt market in Singapore is so shallow that it does not meaningfully drive any market based rate...

 

[fr33d0m]

Thanks. My UOB did not deduct anything as of now. Hope I still get allocated part of it.

UOB already deducted yesterday and posted to CPF today.

If you have no deduction, your bid has failed.

 

[koster]

UOB already deducted yesterday and posted to CPF today.

If you have no deduction, your bid has failed.

Oh no!

 

[reddevil0728]

Thanks. My UOB did not deduct anything as of now. Hope I still get allocated part of it.

Yours is you didn’t maintain 20k right

 

[koster]

Yours is you didn’t maintain 20k right

Yes, that's right

 

[Lè Crayons]

I think you are wrong.
This is what currently shown in my CPF investment dashboard.
I believe it means what's already inside CPFIA can be invested even though OA less than 20k .
Thanks

Balance in Ordinary Account
$4,475.96
Less: Amount reserved as first $20,000
$20,000.00
Add: Balance in Investment Account
$0.19
Available balance
$0.19

Did you manage to get the Tbill?

 

[fr33d0m]

I am surprised monies got deducted from CPF OA so early yesterday! So I expect to see the monies in UOB before it gets paid to MAS on 19/20th, at least some interest credited

Do you have any balance in CPFIA ? I have zero before I applied.

I know DBS charge a penalty for insufficient OA funds/failed application. Not sure about UOB, cannot find the rules.

nothing particular about this deduction. previously it was also deducted on the Friday shown in CPF

 

[reddevil0728]

Yes, that's right

So probably you didn’t get any partial lor.

cause min is 1k

 

[wenguang]

Top up your CPF OA?

I thought the DBS portal would calculate how much you can invest at most.

Correct, but i apply quite early and try to maximize the amount. But 14feb there is a mortgage deduction after i apply. 17feb tbill deduction not enough.

 

[jasvonvios]

For DBS customers, there will be a 0.05% of penalty for unsuccessful investment amount debited from your DBS bank acc.
I know this because last time was apply t bills at the bank branch and have to sign a form to declare this.
Again, things may be change as currently we are allowed to apply online and the T&Cs may be change as well.

For DBS, it will show you the maximum cpf amount you can apply online.