This week T bills went to 4% and that is headlines news to the yield hungry community of Singapore. Yields in Singapore has been relatively low where a 4% risk free instrument is rare (unlike what UK/Europe/USA risk free bonds offers at 4-5%).

What made Singapore T bills go to 4%?

The answer is simple. This T bill tranche had the lowest application amount of US$9.3 billion.

If I were to venture a guess, most of the money that did not bid for Singapore's T bills are institution money which are more mobile. With countries such as Europe offering risk free rates of 4%, it is more intuitive to park funds there. This results in Singapore T bills having a lower demand and hence a higher cut off yieldr. Somehow the cut off yield for this tranche matches the rates announced