Egypt’s inverted yield curve is a good sign: The inversion of the yield curve in Egypt’s bond market is “vindicating Egypt’s decision to undertake the world’s biggest currency devaluation in at least two years,” Bloomberg’s Ahmed Namatalla writes. “The yield on the government’s shortest-maturity treasury bills is higher than the rate on its longest debt for the first time since Bloomberg started tracking the market in 2006.”

Brown Brothers Harriman & Co say this is a welcome signal as it signals slower inflation and lower future interest rates, with its head of emerging markets suggesting that, “Once the central bank feels that inflation has been squeezed out, it will cut rates. So the curve should move from inverted to positively sloped as the bank cuts.” Expect Egyptian asset prices to appreciate, Bryan Carter, head of emerging-markets fixed income at BNP Paribas Investment Partners, tells Namatalla, “the market fully believes that Egyptian assets, and especially the currency, will appreciate in the future … After a currency floats and devalues sharply there is a period of overshoot when it trades too cheap and then investors come back to re-establish fair value.”

Saxo Bank Chief Economist Steen Jakobsen agrees and expects the EGP to settle at EGP 13.50-14.00 per USD 1 by the end of 2017, Al Mal reports.