Market Chatter

Yields on three-month T-bills continue uptrend

Yields on Treasury bills sustained their uptrend, breaking a new five-month high in Sunday’s auction. The Finance Ministry sold EGP54.1bn in three-month T-bills with yields up 40bps to 29.75%, just 100bps short from its peak back in Mar. The higher yields came amidst strong subscription of EGP117bn, while the Ministry aimed to sell EGP40bn. Meanwhile, demand for the nine-month paper remains muted, with yields remaining flat and the Ministry raising only EGP1bn for yesterday’s auction. Yields on three-month bills have now risen by a whopping 393bps YTD in the current FY24/25, reflecting lower demand by foreigners (amidst episodes of portfolio outflows) with local banks pushing yields higher to match their financing structure. The rise shows the Finance Ministry’s tolerance for higher rates at the shortest end of the yield curve, considering the elevated annual inflation in near term, while maintaining yields at longer maturities, particularly the 12-month paper stable, thereby posting an inverted yield curve (CBE, Mohamed Abu Basha).