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UOB rates strategist Victor Yong said the lower cut-off yield was not a surprise.
He said Singapore dollar interest rates have moved lower, taking the cue from the United States, where Treasury yields have decreased dramatically in the past week due to heightened fears of financial instability.
Mr Wong Di Ming, research analyst for global fixed income at Bondsupermart, also said the drop in the cut-off yield was within his expectations.
He said that although US regulators have largely contained any fallout from the collapse of tech lender Silicon Valley Bank, there are concerns about liquidity problems at Credit Suisse, the second-largest lender in Switzerland.
“Investors are worried that rising interest rates have created issues in the banking system,” he added.
DBS Bank’s senior rates strategist Eugene Leow said the drop shows that markets are becoming risk-averse as banking sector worries hit the US and Europe.
Mr Leow said “Fed rate hike expectations have been pared, leading to lower T-bill rates”.
The US Federal Reserve is now faced with a tough policy decision next week: Should it continue to raise rates to fight inflation, which remains high, or should it keep interest rates unchanged to mitigate the strain on the banking system?
Mr Wong said the US central bank will continue to focus on inflation data, rather than the problems created by higher interest rates.
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