Government sells fewer 3-month T-bills than targeted — is this a sign of a trend? The government sold EGP 5.2 bn of 3-month T-bills in a Sunday auction out of EGP 9.25 bn targeted, CBE data shows. Average yields for the 3-month notes came at 17.899% — a marginal increase from the previous auction in which the government sold EGP 7.3 bn-worth of securities with yields of 17.895%. The notes sold fell below the target of EGP 9.25 bn, according to CBE data (pdf). Appetite for 6-month bills was somewhat weak as well, with the government selling EGP 5.2 bn out of EGP 9.25 bn in an auction last week.

The explanation: Investors are dumping short-term notes ahead of an expected rate cut. Investors are anticipating that the Central Bank of Egypt will resume its monetary easing cycle during the fourth quarter of the year, and are moving towards longer term notes, Pharos’ Head of Research Radwa El Swaify said. Beltone Financial’s Alia Mamdouh said the expected interest rate cuts through 2020 would reduce yields on local debt by 1.5% on average.