T-bill yields gallop as uncertainty mounts

The Treasury bill yields shot up across all maturities, with six-month and 12-month yields rising the most.
The Treasury bill yields have been making large gains every week since February on rate increase bets by the bond investors amid increased uncertainty over the future trajectory of inflation and the economy, as the worsening foreign exchange crisis has now transformed into a full-blown political crisis.

The Public Debt Department (PDD) of the Central Bank yesterday issued Rs.80 billion in bills across the three tenures, offering Rs.40 billion in three-month bills and Rs.20 billion each under six-month and one-year bills.
However, the PDD accepted only Rs.72.88 billion worth of bills, with Rs.64.3 billion coming from three-month bills. 

The three-month yield surged by 120 basis points to 14.12 percent, while the six-month yield surged 311 basis points to 15.36 percent. 

The benchmark one-year bill yield soared 341 basis points, from 12.28 percent to settle at 15.69 percent, recording the highest-ever single week gain. 

The wild increase in the T-bill yields is a forerunner for the sharp increase the markets are expecting in policy rates when the Monetary Board meets under the new Central Bank Governor Dr. Nandalal Weerasinghe.