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6 months T-bill auction disappointing. My view.

Thursday, November 24, 2022

In response to the lower than expected 4% p.a. yield in the 6 months T-bill auction which happened in the first half of this month in November, I expressed my disappointment.

I also expressed my disgust but maybe that was a bit too much as desperate people are just behaving like desperate people.

4% yield T-bill 3.2x oversubscribed.

In that blog, I also wondered if the subsequent T-bill auction would see a lower yield with massive oversubscription expected once again?

It would be massively disappointing if the yield should be even lower than the promotional fixed deposit interest rates offered by the banks for a 6 or 12 months tenor.

If I am not mistaken, UOB offered 3.85% p.a. for a 6 months tenor fixed deposit while DBS offered 3.8% p.a. for a 5 months tenor fixed deposit recently.

Anyway, I decided to go ahead and give it a go.

Crossing fingers that we won't get too many low ballers dragging down the yield.

To be honest, I would be quite happy if the cut-off yield is 4% p.a. again.

Setting the bar pretty low given where promotional interest rates on fixed deposits are at.

Not setting high expectations means a lower chance of being disappointed.

So, what's the result?

Cut-off yield for the latest 6 months T-bill auction:

Only 3.9%!

This is only slightly better than the best fixed deposit promotional interest rates we have seen lately.

As if Mr. Market was expecting the yield to be rather uninteresting this time, this T-bill auction was "only" 2.48x oversubscribed!

Source: MAS

Now, do I apply for more T-bills in December or just stick with fixed deposits?

I am leaning towards fixed deposits if the banks' promotional interest rates remain relatively high.

Greater transparency.

Zero suspense.

Better for my weak heart.

However, if fixed deposit promotional interest rates become less interesting too, then, I could try to get some T-bills again next month.

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