Singapore T-bill yields climb: should investors buy?

His wish may just come true. Market-watchers anticipate higher yields in the upcoming auctions as the US Federal Reserve is expected to raise interest rates at least once by December 2026 and a total of twice within the next six months. 

Eugene Leow, head of fixed income research at DBS Bank, said: “As long as Fed hike bets are in play, we would reasonably expect six-month T-bill rates to continue climbing.”

He noted that the interest rates on a six-month T-bill reflect where investors expect the Fed to move rates over the next half a year.

“We think the six-month and one-year T-Bill rates would still grind higher in the coming months as Fed hikes get delivered,” he added.

Wesley Hoon, research analyst with the global fixed-income team at digital wealth platform FSM Global, noted that the Monetary Authority of Singapore manages the economy through the exchange rate rather than by setting interest rates. As a result, Singapore’s short-term rates largely take their cue from US interest rates. 

To illustrate his point, Hoon noted that following the Federal Reserve’s rate hike on Sept 16, the cut-off yield for the six-month T-bill auction on Sept 24 climbed from 1.7% to 1.92%.

“If the Fed pauses in October and hikes in December, as markets expect, that adds upward pressure into year-end, though some of it is already reflected in today’s yields,” he said.

Hoon expects the six-month yields to keep climbing over the remaining auctions in 2026. 

FSM Global is also positive on the one-year T-bills. However, since there are no more one-year bills in 2026, investors must wait until January 2027 to participate.

To avoid sitting on idle cash, Hoon suggested they may want to consider building a T-bill ladder with staggered maturity dates by spreading their cash across multiple upcoming auctions.

Because six-month bills are auctioned every two weeks, investors can allocate a portion into each of the next few issues, making January 2027’s one-year T-bill just another rung in their ladder rather than the final destination, he added. 

“With a ladder, you don’t have to call the peak to earn a decent yield,” Hoon said. “Part of your money matures every couple of weeks. If yields keep rising, you reinvest at higher rates; if they ease, you’ve already locked some in.”

Locking in long-term yields with Singapore Savings Bonds

Beyond T-bills, investors might also consider SSBs as a longer-term option. 

SSBs hit a historic all-time high in their December 2022 issue, offering an average annual return of 3.47% if held for 10 years. 

While the latest November issue of SSBs is still below that high, it represents the highest-yielding SSB issuance of 2026. Investors earn an average return of 2.45% a year if they hold the SSBs to the end. 

Hoon added that investors can choose to cash out of their SSBs any time and get back the full amount they put in. 

This is unlike a regular bond, which may experience price drops when interest rates rise, meaning that investors may not get back the full amount they invested.

However, he cautioned that if investors cash out early, they will not earn the 2.45% return. For example, if they decide to exit after the first year, they will earn only 1.67%, underperforming the current T-bill yields, which are around 1.9%.

“The SSBs suit money you won’t need for several years,” Hoon said. 

“For long-term savings, they offer a sensible way to lock in today’s higher long-term rates, while keeping the option to walk away.”

The equity edge: Why dividend stocks still win for some

That said, while T-bills and SSBs offer secure returns, these low-risk investments may not align with every investor’s financial goals or risk appetite.

Daryl Liew, head and chief investment officer at Phillip Securities, noted that dividend yields from Singapore-listed stocks remain far more attractive. 

“The interest rate hasn’t reached a threshold that can compete very strongly with the dividend yield,” he said, adding that if interest rates climb above 3%, he will “be very tempted” to reconsider.

For now, Liew is advising his clients to hold a bit more cash amid heightened market volatility. 

This liquidity will position them to capitalise on investment opportunities that he expects could emerge in the coming weeks.