Dear readers, the upcoming 6-month T-bill, BS24101Z will have an auction date of 18 Jan 2024, an issue date of 23 Jan 2024. The maturity of the T-bill will come 6 months later, with 23 Jul 2024 as the maturity date.
I believe BS24101Z will be of interest to many especially given that interest rates have started and will continue to head south in view of the expected US Federal Reserves’ interest rate cuts for this year.
The most recent three tranches of the 6-month T-bills have seen cut-off interest yields hovering at around 3.74%. I believe this is a plateau for the cut-off interest rates given the expected downward interest rates. As such, I continue to hold the view that future 6-month T-bills like BS24101Z will decrease.
The question for me is whether how far a decline from 3.74% interest rate will the cut-off interest rate of BS24101Z be?
To answer the above question, I would apply a 5% discount in what I think will be a worst-case scenario: and cut-off interest rate of BS24101Z will be 3.55%, which I believe is still a decent interest rate.
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