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Rising inflation to continue posing risk to yields on T-bills – Report

The rising inflation will continue to pose an upside risk to yields on Treasury bills and other short-term securities.

According to a report by Databank Research, investors will continue demanding higher yields to compensate for the rising inflation.

“Headline inflation came in at 37.20%, fueled by housing and utilities, household furnishings, and transport. We expect investors to continue demanding higher yields to compensate for the rising inflation”.

Inflation has been surging and it’s uncertain whether the rate will fall anytime soon. Though interest rates have been rising, investors are not so much enthused about the yields because it is far lower than the current rate of inflation.

However, the report said investors will maintain their interest in T bills for re-pricing benefits while focusing on the near to medium-term maturities in the secondary market.

Last week, the government failed to meet the auction target of Treasury bills.

But this week the government is seeking to raise 1.44 billion from the 91-day to 182-day bills to refinance the upcoming T-bill maturities of 1.44 billion.

Market turnover stood at ¢3.25bn, up 31.98% last week

Last week, trading activity on the secondary market increased to ¢3.25 billion (+31.98% w/w).

The 2022-2025 maturities saw 33.2% of trades last week, while the 2026-2029 maturities accounted for 58.8% of the turnover.

Strong selling pressures persisted as the yield curve widened by an average of 100 basis points. Yields continue to climb as the market remains net offered.


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