Singapore’s latest six-month Treasury bill (T-bill) auction, finalized on May 22, 2025, saw its cut-off yield drop to 2.2%, down from 2.3% in the previous auction on May 7. This decline marks the fifth consecutive auction since March 26 where yields have fallen, reaching the lowest point in 2025 to date. The consistent downward trajectory reflects evolving market dynamics, with investors adjusting expectations amid Singapore’s stable economic environment and global uncertainties. This trend highlights T-bills as a bellwether for investor sentiment in Singapore’s fixed-income market, particularly as economic policies and global trade tensions, such as the recent delay in U.S. tariffs on EU goods until July 9, 2025, influence financial strategies.

The auction attracted robust interest, with S$18.1 billion in applications for the S$7.5 billion offered, yielding a bid-to-cover ratio of 2.41, up from 2.32 in the prior auction, which saw S$17.1 billion in applications for S$7.4 billion. The median yield fell to 2.18% from 2.24%, and the average yield edged down to 2.07% from 2.09%. Notably, 59% of competitive bids were allotted at the cut-off yield, a significant increase from 23% in the previous round, signaling strong investor enthusiasm. This demand is driven by Singapore’s high credit rating and abundant Singapore dollar liquidity, making T-bills an attractive safe-haven asset. The government’s decision in November 2024 to increase its securities issuance limit to S$1.515 trillion, effective until 2029, further supports the market’s ability to absorb such demand.

Frances Cheung, OCBC’s head of foreign exchange and rates strategy, noted that the 2.2% yield was lower than anticipated, reflecting sustained investor appetite despite reduced returns. She attributed this to the high quality of Singapore’s government securities, which benefit from safe-haven flows amid global volatility, including uncertainties tied to U.S. tax cut proposals and fluctuating U.S. dollar rates. Cheung emphasized that external factors, such as the U.S.-EU trade negotiations following President Trump’s tariff delay, could impact Singapore’s bond market sentiment. Investors are likely to monitor global bond auction performances and policy developments closely. The interplay between local liquidity and international economic shifts underscores the strategic importance of T-bills in diversified portfolios, particularly as markets navigate potential trade disruptions.

Below are charts illustrating the recent trends in Singapore’s six-month T-bill yields and bid-to-cover ratios, providing a clearer perspective on the auction dynamics.