Saturday, December 30, 2023

Investing in T-bills

Upcoming T-bill auctions are scheduled for 4 Jan 2024 (the first tranche 6-month T-bill) and 25 Jan 2024 (1-year T-bill). The 1-year T-bill matures on 28 Jan 2025. This tight schedule poses a challenge for CPFIA investors seeking to transfer funds from CPFIA to their CPF OA so as to carry on enjoying the CPF OA rate of 2.5% pa. Cash investments, however, remain unaffected.

For the January 2024 auctions, market bond dealers will factor in the three anticipated 25 basis points hikes in 2024, as announced by the Fed Chairman. Consequently, the cut-off yield for the 1-year T-bill is expected to be approximately 50 basis points lower than that of the 6-month T-bill. 

Opting to utilise my CPF OA funds, I plan to have a competitive bid for the 6-month T-bill, proposing a lower rate of 3.3% this time, lower than my previous bid. This adjustment is necessary in light of the potential interest rate reduction by the Fed in March, with an anticipated 25 basis points decrease. 

Additionally, I intend to reinvest the upfront interest received from the discounted 6-month T-bill into the 1-year T-bill, maximising the yield and making my CPF OA fund more productive. 

Wishing everyone a joyous and prosperous 2024!

Superphang
http://superphang.blogspot.sg

1 comment:

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    Upcoming T-bill auctions are scheduled for 4 Jan 2024 (the first tranche 6-month T-bill) and 25 Jan 2024 (1-year T-bill). The 1-year T-bill matures on 28 Jan 2025. This tight schedule poses a challenge for CPFIA investors seeking to transfer funds from CPFIA to their CPF OA so as to carry on enjoying the CPF OA rate of 2.5% pa. Cash investments, however, remain unaffected.

    For the January 2024 auctions, market bond dealers will factor in the three anticipated 25 basis points hikes in 2024, as announced by the Fed Chairman. Consequently, the cut-off yield for the 1-year T-bill is expected to be approximately 50 basis points lower than that of the 6-month T-bill.

    Opting to utilise my CPF OA funds, I plan to have a competitive bid for the 6-month T-bill, proposing a lower rate of 3.3% this time, lower than my previous bid. This adjustment is necessary in light of the potential interest rate reduction by the Fed in March, with an anticipated 25 basis points decrease.

    Additionally, I intend to reinvest the upfront interest received from the discounted 6-month T-bill into the 1-year T-bill, maximising the yield and making my CPF OA fund more productive.

    Wishing everyone a joyous and prosperous 2024!

    ReplyDelete