6-month T-Bills yields stabilise at 3.74% – Demand for T-Bills drops from record highs (25 April 2024 Auction Results)

Trending 3 weeks ago

In my weekend article, I estimated a output of 3.70% – 3.85% for nan upcoming 6-month T-Bills auction.

Well, nan auction results are retired – 3.74%, towards nan little extremity of my projected range.

However T-Bills request fell rather a spot to $14.4 cardinal (vs $16 cardinal nan erstwhile auction).

While auction magnitude accrued to $6.6 cardinal (vs 6.3 cardinal nan erstwhile auction).

All while nan marketplace has moved to value successful little liking complaint cuts successful 2024.

So nan truth that T-Bills yields really went down somewhat (3.74% vs 3.75% nan past auction) is interesting.

 

6-month T-Bills yields driblet to 3.74% (25 April 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 3.74% output (a driblet from 3.75% nan erstwhile auction).

This is charted successful chart shape below.

While T-Bills yields are good disconnected nan Feb lows, and comfortably backmost into nan 2023 range.

You tin besides spot really T-Bills yields person mostly stabilised astir nan 3.7 – 3.8% scope nan past 5 auctions.

Demand for T-Bills drops to $14.4 cardinal (from $16.0 cardinal nan past auction)

What is absorbing is that request for T-Bills dropped rather a bit.

We’re seeing only $14.4 cardinal successful T-Bills applications, which is down 10% from nan erstwhile auction ($16.0 billion).

Charted below, you tin spot really T-Bills request has travel down rather a spot from caller highs – though it still remains overmuch higher than nan request we saw successful 2023.

As to why T-Bills request tapered off, its not very clear.

Perhaps because it’s nan extremity of nan month, CPF-OA buyers for illustration to hold for nan adjacent tranche.

Or possibly nan 1-year T-Bills auction conscionable a week agone sucked up immoderate of nan excess liquidity.

While auction magnitude for T-Bills goes up to $6.6 cardinal (vs $6.3 cardinal nan erstwhile auction)

The auction magnitude of $6.6 cardinal this auction is really higher than nan $6.3 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? Due to stabilisation successful yields?

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.

This suggests that investors are beautiful logical pinch their bidding, and not submitting lowball bids conscionable to get an allotment.

A bully logic for this could beryllium nan truth that yields person stabilised astir nan 3.7% – 3.8% level, truthful investors person much certainty astir wherever to taxable their competitory bids.

How do you cognize if you person been allotted T-Bills? (25 April 2024 Auction)

If you applied Non-Competitive Bid, you will get 96% allotment of immoderate you applied for (down from 94% nan past auction).

Ie. If you applied $100,000, you get $96,000 worthy of T-Bills allotted.

If you applied Competitive Bid, then:

Full allotment if you applied beneath 3.73% and below.

21% allotment (approximately) if you applied 3.74%

No allotment if you applied 3.75% 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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