Playing cat and mouse with the carry traders: Yields on three- and nine-month T-bills fell at an auction on Sunday after a month-long advance, Reuters reports. the yield on three-month treasuries fell to 19.364% from 19.69% a the last auction, while the yield on nine-month bills dropped to 19.422% from 19.68%. Rates had peaked last week, a sign some have suggested is suggests waning interest amid the still unfolding Emerging Markets Zombie Apocalypse. Banking sources told Reuters over the weekend that Egypt saw up to USD 5 bn in outflows from its debt market as a result of the broader emerging market selloff. The CBE’s data bulletin for April indicated that the foreign holdings of Egyptian debt fell 1.25% m-o-m to EGP 375.5 bn — the first drop in foreign portfolio investments in 2018. “The average coverage ratio for treasuries, a measure of participation in debt auctions, dropped to its second lowest level in June since EGP was floated in late 2016,” our friends at Pharos said in a note on Sunday. “The auction saw higher participation than in recent weeks but there was no breakdown available between local and foreign buyers,” Reuters adds. Take it as additional impetus for the central bank to leave interest rates unchanged.

These external factors are driving the government to reduce its reliance on short-term borrowing and look to long-term facilities, Finance Minister Mohamed Maait told us in an exclusive chat over the weekend. The Finance Ministry, which cancelled a bond sale last Tuesday because prices were too expensive, is now in talks with multiple international funders to plug Egypt’s funding gap, through loans of up to 30 years in duration.