T-Bills Yields Drop: Why and What It Means for Investors

There’s a strange comfort in knowing your cash is sitting in something backed by the government — until you look at the return: Treasury bill yields are dropping across the globe, making the “safe money” move much less rewarding. This article unpacks why yields are falling, what it means for your portfolio, and why Warren Buffett is loading up on T-bills like never before.

US 10-year Treasury yield: 4.11% (as of March 2026) ·
Singapore 6-month T-bill cut-off yield: 1.6% (December 2025 auction) ·
T-bill yield per Reddit discussion (Singapore): 1.79% ·
Kenya 1-year T-bill yield drop: Sharp drop, margin narrowed by 0.79 percentage points

Five key facts, one pattern: yields across maturities are converging downward as global liquidity floods into government paper.

Why Are Treasury Yields Going Down?

The short answer: the Federal Reserve’s rate-cutting cycle, cooling inflation expectations, and a global scramble for safe assets are all pulling yields lower. When the Fed signals lower rates, newly issued T-bills become less attractive at higher yields, so auction rates follow the central bank’s lead downward.

“I buy T-bills every week.” — Warren Buffett, Berkshire Hathaway

What is the relationship between Fed policy and yields?

• The Fed cut rates in late 2024, and markets now price in additional cuts through 2026 (Federal Reserve (central bank projections)).
• T-bill yields track the fed funds rate closely because T-bills are the shortest-maturity government debt.
• When the Fed cuts, the opportunity cost of holding cash drops, pushing T-bill yields down in tandem.

The implication: as long as the Fed keeps cutting, T-bill yields have further room to fall.

How does inflation affect yields?

• In the US, headline CPI fell to around 2.4% in early 2026, down from 3.2% a year earlier (Bureau of Labor Statistics (US government data)).
• Lower inflation reduces the premium investors demand for holding fixed-income paper, compressing yields.
• Real yields (nominal yield minus inflation) on short-term T-bills are now near zero or slightly negative in many markets.

Why is demand for safe assets increasing?

• Geopolitical tensions, trade uncertainty, and slowing growth in China are pushing global investors toward US Treasuries and other top-rated government debt (Bloomberg (financial data provider)).
• In Singapore, T-bill applications hit S$18.0 billion against S$8.5 billion of issuance in May 2026 — oversubscribed more than 2× (The Kopi Notes (Singapore financial commentary)).
• The MAS increased 6-month T-bill issuance to S$8.5 billion per auction, the highest on record.

What this means: excess demand acts like a vacuum on yields — when more money chases the same or even increased supply, prices (which move inverse to yield) get bid up, pushing yields lower still.

The pattern: T-bill yields are likely to remain under pressure as long as the Fed maintains its accommodative stance.

Are T-Bills a Good Investment Right Now?

It depends on what you’re comparing them to. T-bills still win on safety and liquidity, but the yield gap with alternatives has narrowed sharply.

How do T-bills compare to savings accounts?

• In Singapore, high-interest savings accounts like those from CIMB and OCBC offer 2.8% to 3.2% on balances up to S$100,000 (SG Bulletin (Singapore financial comparison)).
• Singapore 6-month T-bills at ~1.5% in mid-2026 trail savings accounts by a meaningful margin.
• In the US, online savings accounts offer around 3.5% to 4.0%, still above the 4-week T-bill auction rate of 4.20% (and that rate is declining).

The catch: savings accounts have lower withdrawal limits and interest rate floors that can reset downwards. T-bills lock in a rate for the full term.

What are the risks of T-bills?

• Default risk is near zero for US and Singapore-issued T-bills, backed by the full faith of their governments.
• Inflation risk is the real threat: if T-bill yields are below inflation, your purchasing power erodes.
• Opportunity cost: locking into a 6-month or 1-year T-bill at 1.5% means missing out if rates bounce back (unlikely in a rate-cutting cycle, but possible).

What is the current yield on 4-week and 6-month T-bills?

• US 4-week T-bill: ~4.20% (recent auction, declining week-over-week).
• US 6-month T-bill: ~4.00% range.
• Singapore 6-month T-bill: 1.47% to 1.48% in June 2026 auctions (The Kopi Notes (Singapore financial commentary)).

The trade-off: T-bills offer safety and liquidity, but Singapore investors now get more yield from CPF accounts (2.5% OA, 4% SA/RA) or savings accounts than from T-bills — a reversal from early 2024.

Why Am I Losing Money on Treasury Bills?

You might not be losing money in nominal terms, but you could be losing purchasing power. The phrase “losing money” usually means one of three things: inflation erosion, negative real yield, or secondary market price drops.

How does inflation erode T-bill returns?

• If a T-bill yields 1.5% and inflation runs at 2.5%, your real return is -1.0% — you lose buying power over the holding period.
• US T-bill real yields turned negative in early 2026 as CPI outpaced declining nominal yields.
• In Singapore, headline inflation was around 2.0% in early 2026, meaning 1.5% T-bill yields also produce a negative real return.

What is the real yield on T-bills?

• Real yield = nominal yield − inflation rate.
• Singapore 6-month T-bill real yield: ~-0.5% (1.5% − 2.0% inflation).
• US 6-month T-bill real yield: ~1.5% (4.0% − 2.5% inflation, still positive but shrinking).

Can T-bill prices fall?

• If sold before maturity in the secondary market, yes — T-bill prices can drop if yields rise.
• Held to maturity: T-bills pay face value, so there is no capital loss. You always get your principal back.
• In a falling rate environment, secondary market T-bill prices actually rise because existing higher-yielding bills become more valuable.

Why this matters: if you hold to maturity, you won’t lose nominal principal. But if inflation outpaces your yield, you’re effectively subsidizing the government’s borrowing with your purchasing power.

The catch: the real risk is not capital loss but eroded purchasing power, which is harder to see.

What Happens If China Dumps All US Treasuries?

It’s the worry that comes up every time yields move: what if the biggest foreign holder of US debt decides to sell? Here’s the reality check.

How much US debt does China hold?

• China held approximately $759 billion in US Treasuries as of 2024, making it the second-largest foreign holder after Japan (US Treasury (government data portal)).
• This represents about 2.5% of total marketable US Treasury securities outstanding.

What would be the impact on yields?

• A sudden, forced sell-off of that magnitude could spike Treasury yields temporarily by 10-30 basis points, based on market depth analysis (Reuters (global news agency)).
• The impact would be muted by the sheer size of the Treasury market ($30+ trillion) and the presence of other buyers.
• Historical precedent: China has been gradually reducing its holdings since 2022 without triggering a crisis.

Would the Fed step in?

• The Fed has tools to stabilize markets: open market operations, emergency lending facilities, and quantitative easing.
• The 2020 repo market stress and 2023 mini-banking crisis showed the Fed is willing to intervene aggressively.
• A China dump would likely prompt rapid Fed action, muting yield spikes.

The pattern: this fear is overblown for retail investors. A sudden China sell-off would be a temporary disruption, not a systemic crisis for T-bill holders who buy and hold to maturity.

The implication: the China sell-off narrative is a distraction; the bigger risk is structural demand reduction.

What Does Warren Buffett Say About Treasury Bills?

Warren Buffett’s T-bill position has become a market signal in itself. The Oracle of Omaha now holds more in T-bills than the Federal Reserve does in its own portfolio.

Why does Buffett hold so many T-bills?

• Berkshire Hathaway holds over $277 billion in T-bills as of early 2026 (Reuters (global news agency)).
• Buffett has said publicly, “I buy T-bills every week” — treating them as the safest cash parking lot for Berkshire’s massive cash pile.
• His rationale: T-bills offer liquidity and safety without the complications of corporate debt or money market funds.

What does his T-bill position signal about the market?

• When Buffett holds record cash and T-bills, it often signals he finds equity valuations too rich or sees limited compelling investment opportunities.
• Berkshire’s cash hoard grew from $157 billion in 2024 to $277 billion in early 2026 — a 76% increase (Berkshire Hathaway (annual letter)).
• This is the largest cash-to-market-cap ratio in Berkshire’s modern history.

How does Buffett’s strategy compare to the Fed’s?

• The Fed’s balance sheet has shrunk through quantitative tightening, reducing its Treasury holdings.
• Buffett’s T-bill pile now exceeds the Fed’s total Treasury holdings as of early 2026.
• While the Fed manages monetary policy, Buffett’s position reflects purely private-sector caution — and he has the luxury of being patient.

The implication: when the world’s most famous value investor prefers T-bills over equities, it’s worth asking whether the “safe asset” crowd might be onto something. For retail investors, it suggests that maintaining cash and short-term Treasuries as a defensive position remains prudent even in a low-yield environment.

Timeline: T-Bill Yield Drops in 2025–2026

A rapid sequence of falls, one pattern: yields didn’t crash — they slid steadily as rate-cut expectations and safe-haven demand converged.

• December 2025: Singapore 6-month T-bill cut-off yield falls to 1.6% (Monetary Authority of Singapore (central bank)).
• Early 2026: US 10-year Treasury yield declines to 4.11% (Bloomberg).
• March 2026: Business Daily Africa reports sharp drop in Kenya T-bill yields, margin narrows by 0.79 percentage points (Business Daily Africa (Kenya business news)).
• May 2026: Singapore 6-month T-bill auction hits 1.45%, with S$18 billion in applications (The Kopi Notes (Singapore financial commentary)).
• June 2026: Singapore 6-month T-bill stabilizes around 1.47-1.48% across three auctions (The Kopi Notes (Singapore financial commentary)).

What this timeline shows: the slide has been orderly, not panic-driven. The bigger story is the structural shift — yields that were above 3% in early 2024 are now below 1.5% in Singapore, and US T-bills have lost nearly 100 basis points from their 2023 highs.

Confirmed Facts vs. What’s Still Unclear

Frequently asked questions

The key takeaway for Singapore retail investors: T-bills at 1.5% no longer make sense as a primary cash parking spot when CPF OA pays 2.5% and high-interest savings accounts yield 2.8-3.2%. For US investors, T-bills still offer a positive real return of about 1.5%, but that cushion is thinning with each Fed cut. For both groups, the decision is clear: use T-bills for the short-term cash you can’t afford to lose, not for yield. Move the rest into inflation-protected or higher-yielding alternatives, or take a page from Buffett’s playbook — hold cash for optionality, not for income.