Dear readers, it is now common knowledge that the interest yields of Singapore Treasury Bills (T-bills) have been on the decline, ever since the US Federal Reserves start to lower interest rates.
And hence Singapore Savings Bonds and T-bills are no longer talked about.
But recently, there has been a talk about again on T-bills, as also reported in the news.
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When some things capture the spotlight, there can only be two possibilities: for the Better or the Worse.
The first cannot be the scenario for Singapore T-bills since the backdrop for T-bills is not favorable. Hence it can only mean the second scenario.
I read from the newspapers today that the cut-off yield for Singapore’s one-year T-bill has declined to 2.71% per annum.
First, something to note: One-year T-bills are issued only 4 times in a year, unlike the more popular 6-month T-bills which are issued twice a month. The second most recent one-year T-bill (issued in July 2024) has a cut-off yield of 3.38% per annum. So, the latest closed T-bill was down by 0.67% per annum!
I read that the break-even point for investors using CPF to purchase Singapore’s T-bills is 3.33% per annum (6-months T-bill) and 2.92% per annum (one-year T-bill). With the interest rate of the latest closed T-bill below 2.92% per annum, some financial analysts are of the view that the latest T-bills are no longer attractive.
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The latest 6-month T-bill which has closed (BS24120V) has offered an interest rate of 3.06% per annum and this is also not attractive based on the above break-even points.
Analysts cited 2.30% to 2.50% per annum as likely interest rates of T-bills in early to mid 2025.
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For myself, yes, I view Singapore T-bills no longer attractive. What is attractive is to continue to save as a dollar saved is a dollar earned.