It’s been quite a while since we’ve done a debrief of the T-Bills auctions.
Given it’s the start of the new year, and given the higher auction size this time around, I decided to do exactly that today.
TLDR is that application demand stabilised at very high levels of $12.8 billion (flat vs previous auction).
But yields went up slightly to 3.74% (vs 3.73% the previous auction), perhaps due to larger auction size.
And 100% allotment for non-competitive bidders.
Pretty interesting results, so let’s take a closer look.
6-month T-Bills yields up slightly at 3.74% (4 Jan 2023 Auction Results)
I’ve extracted the cut-off yield for the latest T-Bills auction below.
This round of 6-month T-Bills are issued at 3.74% yield (a small increase from 3.73% the previous auction).
I’ve charted this in graph form below.
T-Bills yields are well off the 2023 highs, and close to the lows hit in all of 2023.
Demand for T-Bills stabilises at a high $12.8 billion
Demand for T-Bills stabilises at $12.8 billion.
This is flat from the previous auction.
These are very high levels of demand, well above the average levels hit for most of 2023.
Note that the auction amount of $6.1 billion this time around is quite a big larger than the previous auction $5.6 billion.
So the fact that cut-off yields only went up slightly is interesting – suggesting that has auction amounts stayed flat we would have seen a drop in yields.
Less lowballers? Spread between median and average yield
The spread between the median and average yield tells you how many “low-baller” bids there were.
To illustrate what this is:
Imagine you have 100 bids.
The median yield, is if you arrange all the bids from small to high, and take the yield of the 50th bid.
While average yield, is adding up the yields of all 100 bids and dividing by 100.
So average yields are skewed by lowball bids, while median yields are not.
To put it simply – the bigger the spread between the median yield and average yield, the more “low-ballers”.
Spreads has dropped quite a bit of late – indicating more rational bidding.
How do you know if you have been allotted T-Bills?
If you applied Non-Competitive Bid, you will get 100% allotment of whatever you applied for.
Ie. If you applied $10,000, you get $10,000 worth of T-Bills allotted.
If you applied Competitive Bid, then:
Full allotment if you applied below 3.74%
66% allotment (approximately) if you applied 3.74%
No allotment if you applied 3.75% and above.
If you forgot what you bid, the easiest way is to check if you have any refund from your bank tonight.
Some banks like OCBC will also issue you a confirmation note (but DBS doesn’t).
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