T-bill yields ease ahead of monetary policy

The Treasury bill yields continued to ease at yesterday’s weekly auction, ahead of the eighth monetary policy meeting, which is largely expected to keep the policy rates unchanged. 

The three-month bill yield fell 14 basis points to 32.92 percent, the six-month yield shed six basis points to 32.45 percent and the 12-month yield slipped one basis point to 29.52 percent. 

The Treasury bill yields have titled downward as of late on recent comments by the Central Bank towards easing rates and the pause in the monetary policy tightening cycle after the soft inflation readings in October.

The bill yields started to ease since the beginning of November, after remaining flat for three consecutive weeks during October, while displaying a gradual increase in the acceptance rate, First Capital Research (FCR) said. 

“Accordingly, market sentiment implied some bullishness prior to the weekly bill auction held on November 16, 2022 and the auction yields across the board edged down by 2-8 bps after seven weeks of mixed results hinting a welcome towards an era of monetary easing,” FCR said, making the case for a dovish monetary policy stance going forward. 

The Central Bank issued Rs.80.0 billion in bills across the three maturities at yesterday’s auction and saw acceptances of up to Rs.74.9 billion, of which Rs.52.7 billion was under three-month bills.