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Tuesday, 29 October 2019

Yields on short-term gov’t treasuries continue rallying, while long-term yields dip

Yields on short-term gov’t treasuries continue rallying, while long-term yields dip: Yields on Egypt’s short-term government treasuries are picking up for the third consecutive week, after falling 200 bps after the Central Bank of Egypt (CBE) began cutting interest rates in August. A gauge used by Al Mal to measure average yields showed that returns on three-month t-bills climbed 0.05% to 15.682% after last week’s sales, which saw an uptick in subscriptions. Other short-term bills also saw higher yields. Yields on five-year and 10-year bonds fell 0.07% and 0.114%.

The dip in yields on long-term debt shows the market is pricing in another rate cut next month, an unnamed local bank official tells the newspaper. Fitch Solutions had predicted the CBE to cut interest rates by 0.5% before the end of the year, and 1.5% in 2020, while EFG Hermes forecast a 100 bps cut in the upcoming meeting and Beltone predicted that the MPC will reduce rates by 50-100 bps due to the September shock fall in inflation. The CBE has cut rates by 350 bps so far this year, and 250 bps since August.

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