Dear readers, BS24103H, the 6-month Treasury Bill (T-bill) which had its auction just two days ago, on 15 Feb 2024 surprised many for its cut-off yield.
As a recap, cut-off yields of recent 6-month T-bills have been declining across consecutive tranches:
BS24102S, auction date: 1 Feb 24; cut-off yield of 3.54% per annum.
BS24101Z, auction date: 18 Jan 24; cut-off yield of 3.70% per annum.
BS24100F, auction date: 4 Jan 24; cut-off yield of 3.74% per annum.
In an earlier post about the projection of interest rates for BS24103H, I asked whether would we see a further reduction of 0.20% per annum reduction for BS24103H so that the cut-off interest reaches 3.34%?
I added that while this can be possible, successive steep cut-off yield reductions are rare, and hence I concluded that for BS24103H, the cut-off yield should be in the range of 3.40% to 3.50% per annum.
However, the cut-off yield for BS24103H has surprised many. Instead of a further decline, the cut-off yield for the T-bill increased to 3.66% per annum!
This is unexpected as against a climate of expected decrease in interest rates, many have also expected the interest rates of T-bills to decline in tandem.
3.66% per annum interest rates: an interest rate which I believe to be the highest in town currently!
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