Treasury yields recover for second consecutive week: Yields on government treasuries continued to recover after falling by 200 basis points since the central bank resumed its interest rate easing cycle in August. A gauge used by Al Mal to measure average yields climbed by 0.26% to 15.75% after last week’s sales. This came as subscriptions for Egyptian t-bills and t-bonds fell substantially during an auction yesterday.

This shows the power of economic expectations: The ongoing recovery is in part because investors ahead of the September Monetary Policy Committee (MPC) meeting overestimated the extent of the rate cut, pricing in expectations of a 150-200 bps rate cut, rather than the 100 bps that was made, the newspaper quoted an analyst as saying. Falling yields reduced investor appetite and led to a sell-off, which in turn pushed up yields. The fact that this trend is holding suggests that there are market expectations of further easing in the two upcoming MPC meetings on 14 November and 26 December.