6-month T-Bills yields drop to 3.70% – Demand for T-Bills jumps to record highs (9 May 2024 Auction Results)

Trending 2 weeks ago

In my weekend article, I estimated a output of 3.70% – 3.80% for nan upcoming 6-month T-Bills auction.

Well, nan auction results are retired astatine 3.70% trim disconnected yield, correct connected nan bottommost of my projected range.

To beryllium adjacent though, latest US economical information came successful slower than expected, raising marketplace hopes for 2 liking complaint cuts successful 2024.

So this would person impacted T-Bills yields connected nan downside.

At nan aforesaid clip – T-Bills request jumped to grounds highs astatine $16.3 cardinal (vs $14.4 cardinal nan erstwhile auction).

This is nan highest T-Bills request we person seen since 2022.

Let’s return a deeper look astatine nan numbers.


6-month T-Bills yields driblet to 3.70% (9 May 2024 Auction Results)

I’ve extracted nan cut-off output for nan latest T-Bills auction below.

This information of 6-month T-Bills are issued astatine 3.70% output (a driblet from 3.74% nan erstwhile auction).

This is charted successful chart shape below.

You tin besides spot really T-Bills yields person mostly stabilised astir nan 3.7 – 3.8% scope nan past 6 auctions.

However – location does look to beryllium a downtrend successful spot for nan past 3 T-Bills auctions.

Demand for T-Bills jumps backmost up to grounds highs astatine $16.3 cardinal (from $14.4 cardinal nan past auction)

Demand for T-Bills jumps backmost up to grounds highs.

We’re seeing a monolithic $16.3 cardinal successful T-Bills applications, which is up 13% from nan erstwhile auction ($14.4 billion).

Charted below, you tin spot really T-Bills request has gone backmost up to grounds highs since 2002.

This is particularly aft nan crisp driblet successful request nan past auction.

Given nan truth that banks are cutting liking rates crossed nan board, I suppose this isn’t that surprising.

While auction magnitude for T-Bills goes up to $6.8 cardinal (vs $6.6 cardinal nan erstwhile auction)

Note that nan auction magnitude of $6.8 cardinal this auction is really higher than nan $6.6 cardinal nan erstwhile auction.

So nan truth that nan cut-off yields went down contempt nan higher auction magnitude is notable.

This suggests that had auction amounts not gone up, we mightiness person seen a bigger driblet successful T-Bills yields.  

Less lowballers, much logical bidding for T-Bills?

The dispersed betwixt nan median and mean output tells you really galore “low-baller” bids location were.

To exemplify what this is:

Imagine you person 100 bids.

The median yield, is if you put each nan bids from mini to high, and return nan output of nan 50th bid.

While mean yield, is adding up nan yields of each 100 bids and dividing by 100.

So mean yields are skewed by lowball bids, while median yields are not.

To put it simply – the bigger nan dispersed betwixt nan median output and mean yield, nan much “low-ballers”.

Spreads person really stabilised for nan past 4 auctions.

However it jumped rather notably successful nan astir caller auction.

Why this is nan lawsuit is not very clear though, particularly since pinch nan stabilisation successful yields, location really is nary logic to taxable a low-ball bid.

How do you cognize if you person been allotted T-Bills?

If you applied Non-Competitive Bid, you will get 81% allotment of immoderate you applied for (down from 96% nan past auction).

Ie. If you applied $100,000, you get $81,000 worthy of T-Bills allotted.

If you applied Competitive Bid, then:

Full allotment if you applied beneath 3.69% and below.

26% allotment (approximately) if you applied 3.70%

No allotment if you applied 3.71% and above.

If you forgot what you bid, nan easiest measurement is to cheque if you person immoderate refund from your slope tonight.

Some banks for illustration OCBC will besides rumor you a confirmation statement (but DBS doesn’t).

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