T-bill yields are falling! How to not “spoil market” when bidding for T-bills.
By Beansprout • November 17, 2022
TL:DR
T-bill competitive bids offer you an opportunity to invest in the bond only if yields are above a certain level. MAS will allocate to the lowest yielding competitive bids first. However, this does not mean that we should put in the lowest possible bid. We’d compare the yields of other instruments such as fixed deposits, and check out current T-bill interest rates before putting in competitive bids. This can be adjusted depending on whether allocation or minimum yield is more important, and whether CPF funds are used to subscribe to the T-bills.
What happened?
There were two things that surprised investors about the last T-bill auction on 10 November. For the first time in recent auctions, non-competitive bids were only able to get partial allocation for the T-bill.The yield on the T-bill also came down to 4.0% p.a. from 4.19% in the previous auction as demand surged. Many in the Beansprout community...
