Singapore Treasury bills (T-bills)

[Taurus66]

CNA: Singapore banks see higher investor interest in T-bills as inflation rises.

 

[Geralt]

https://www.straitstimes.com/busine...ly-to-peak-in-early-2023-even-as-demand-slows

The run of ever-rising interest rates that has attracted investors to Singapore government securities like Treasury bills (T-bills) and Singapore Savings Bonds (SSBs) looks to be winding down.
There are growing indications in the United States that rates will not be hiked as aggressively as has been the case for much of the year, which will inevitably result in softening rates here after months of rises.
Yields on government securities have shot up from below 1 per cent a year a few months back to between 3 per cent and 4 per cent, sparking a surge in demand.
The last two T-bill auctions were so popular that the Monetary Authority of Singapore had to delay the release of the auction results.
The high yields have reflected those surging US interest rates, but markets now expect the US Federal Reserve will ease up a little after consumer prices rose less than expected in October.
Federal Reserve chairman Jerome Powell also said this week that smaller rate increases are likely as early as December, while warning that the fight against inflation is not yet over.
Interest rates in the US have already responded: The benchmark 10-year Treasury has fallen to 10-week lows of around 3.52 per cent and the two-year note, which moves in line with interest rate expectations, dropped to early October levels of about 4.22 per cent.
In Singapore, benchmark yields for five-, 10-, 15- and 20-year government securities have come down since October.
The trend is now being felt in other government securities: Yields on the two T-bill auctions in November fell after hitting a record high of 4.19 per cent a year in the Oct 27 round.
Mr Wong Di Ming, research analyst for global fixed income at Bondsupermart, expects three more hikes in the US, with rates peaking in early 2023.
Yields on T-bills here will continue climbing in turn, but the spread between six-month T-bills and the US Fed funds rate is narrowing as it gets closer to the end of the rate hikes, Mr Wong added.
The Fed funds rate, which is the target rate set by the US central bank, is the level at which banks charge one another for overnight loans of funds. It is now between 3.75 per cent and 4 per cent.
Yields on Singapore Savings Bonds have also dropped.
The January issue is offering an average return of 3.26 per cent a year if held for 10 years, compared with 3.47 per cent a year for the December issue.
January’s SSBs still offer a higher average return than the November issue, which gives an average return of 3.21 per cent a year if held for 10 years.
But if an investor does not hold the January SSBs to maturity, the returns will be much lower than the November issue up until year eight, when the average returns from both issues are similar at 3.19 per cent a year.

The fall in yields comes as demand for government securities starts slowing.
Despite the large volume of applications in the last two T-bill auctions, the bid-to-cover ratio actually dropped – from 3.17 in the Nov 10 auction to 2.48 in the Nov 24 auction.
This ratio refers to the dollar amount of T-bills that are applied for versus the dollar amount being sold. A lower bid-to-cover ratio means the amount in applications has gone down compared with the amount on offer.
Subscriptions for SSBs fell for the December issue: The subscription rate was 1.7 times versus November’s 2.4 times and well under the record high of 3.5 times in August.

Mr Wong said fixed deposits have become more attractive to retail investors.
UOB is offering between 3.55 and 3.95 per cent a year for deposits of six-, 10- and 12-month tenures, and OCBC Bank is giving rates of 3.4 per cent to 3.9 per cent for deposits of 12 months.
“Ultimately, fixed deposits are still more convenient and easily accessible for retail investors, in contrast to SSBs and T-bills, which could have been the reason for the shift in demand,” Mr Wong added.
The Financial Horse blogger said T-bills and SSBs both have merits.
He noted that T-bills have higher short-term yields but are not easy to sell before maturity.

Investors can sell T-bills only at the branches of one of the three local banks: DBS Bank, OCBC or UOB.
On the other hand, Financial Horse said SSBs can be redeemed easily at the start of the month, and the investor can get back his money any time, but the short-term yields are not as attractive as those of T-bills.
Ms Lee Meng, executive financial services consultant at Gen Financial Advisory, said T-bills and SSBs can be used to plan for financial needs within a six-month to 10-year period, such as down payments for a big-ticket purchase like property or funding children’s education.
“However, for longer-term needs such as capital appreciation, lifetime retirement income or legacy planning, T-bills and SSBs are not attractive in both fit and performance”, Ms Lee added.

 

[lzydata]

CNA: Singapore banks see higher investor interest in T-bills as inflation rises.

Always nice to see the media finally give T-bills some attention, but this CNA segment does not state clearly that the physical queuing at bank branches is for T-bills using CPF OA, not cash/SRS.

Today's Business Times Weekend main story is "All you need to know about Singapore T-bills":

https://www.businesstimes.com.sg/opinion-features/all-you-need-know-about-singapore-t-bills

 

[mikezuper]

I thought you would update the uncles that it should be 1.95% based on https://investmentmoats.com/uncateg...ber_2022_investment_moats&utm_term=2022-12-02

These kind of articles the one that will brong the yield down .. sigh

1.95/3.8 just go FD lah

 

[semiret]

This type of reporting no wonder not much people willing to pay for subscription. Haha

 

[lzydata]

This type of reporting no wonder not much people willing to pay for subscription. Haha

Can come here and learn more about T-bills for free

 

[oceanicmanta]

Ms Lee Meng, executive financial services consultant at Gen Financial Advisory, said T-bills and SSBs can be used to plan for financial needs within a six-month to 10-year period, such as down payments for a big-ticket purchase like property or funding children’s education.
“However, for longer-term needs such as capital appreciation, lifetime retirement income or legacy planning, T-bills and SSBs are not attractive in both fit and performance”, Ms Lee added.

upselling at every opportunity ... aunties n uncles beware

 

[lzydata]

upselling at every opportunity ... aunties n uncles beware

Absolutely... the banks and investment advisers earn nothing from products like T-bills. In fact it is a cost to them to provide the customer service.

 

[homedriver]

Actually how the tbill cutoff yields decided? Sorry for my simple question.

 

[yumsang]

the younger MG are already well educated professionals
soon most here will be like them in time to come
today you kb them, very soon people kb you

 

[F1ngolf2012]

yes, be a good citizen and be grateful

Yup! I can see a potential "good" customer. Not sure about being a good citizen.

 

[ahnyaahnya]

These kind of articles the one that will brong the yield down .. sigh

1.95/3.8 just go FD lah

Those using cash better to do FD.
% is about same.
Don't have to let your money be tied up for more than a week earning zero interest.

 

[ahnyaahnya]

Actually how the tbill cutoff yields decided? Sorry for my simple question.

You understand about COE ?

 

[yumsang]

FD is still there for now, got cash can tikam Tbill first may be got good catch

 

[homedriver]

You understand about COE ?

Ok so depend on how people bid. So is totally no idea what the rate will be.

 

[ahnyaahnya]

Ok so depend on how people bid. So is totally no idea what the rate will be.

Yes.
Those who bid highest (low discount %) , get allocated first. And down the line until no more left (cut off). All pay same price (get same % discount).
Same like COE

 

[demoforce1]

Yup! I can see a potential "good" customer. Not sure about being a good citizen.

so what is a good citizen?
fighting for the nation by wasting time for nothing

 

[limjohnny]

FD is still there for now, got cash can tikam Tbill first may be got good catch

So what bid u putting for the next T-bill?

 

[F1ngolf2012]

so what is a good citizen?
fighting for the nation by wasting time for nothing

Since be a good citizen come from you. Perhaps you could share how does a good citizen looks like in the light of the DBS's goof up on T-bills allocation and informing customer after 3 months?
As a mark of respect to this T-bills thread, this will be my last post on this topic. And I've better thing to invest my time on than trying to share the difference between good customer and good citizen.

 

[demoforce1]

Since be a good citizen come from you. Perhaps you could share how does a good citizen looks like in the light of the DBS's goof up on T-bills allocation and informing customer after 3 months?
As a mark of respect to this T-bills thread, this will be my last post on this topic. And I've better thing to invest my time on than trying to share the difference between good customer and good citizen.

yes, you are right, and since you mentioned "time", it is just wasted time to go for fidrec
be wise to use our time