Benchmark one-year T-bill yield continues to show downward stickiness

The benchmark one-year Treasury bill yields continued to show downward stickiness at the final primary bill auction held for the year yesterday, where the Central Bank raised the full offered amount of Rs.77.5 billion.
The benchmark one-year bill yield held steady at 12.93 percent, unchanged from last week’s levels, after it gained 10 bps from the week earlier. 
Both the three-month and six-month bill yields continued to tick lower by six basis points and eight basis points each, to settle at 14.51 percent and 14.16 percent, continuing the modest declines seen in the previous weeks. 
At the start of the year, most of these bills were generating yields that were above or close to the 30 percent mark.
For instance, at the first bill auction held this year, both the three and six-month bills fetched yields of 32.01 percent and 32.02 percent each, while the one-year bills fetched 29.16 percent.
At the bill auction held yesterday, the Central Bank offered Rs.27.5 billion under the three-month bills and Rs.25 billion each under the six-month and 12-month bills. 

But as usual, it accepted far higher than what it offered under the two short-term bills – Rs.33.80 billion under the three-month bill and Rs.42.97 billion under the six-month bill.  However, the Public Debt Department of the Central Bank accepted only Rs.732 million from the one-year bill, possibly because most bids surpassed the yield levels observed in the previous week.
The Central Bank in November paused its monetary easing cycle, after cutting rates by 100 bps, to give space for the benchmark yield and interest rates to fall near the policy rates.  Currently, the policy rates stand at 9.0 percent and 10.0 percent, respectively.