Karachi December 16, 2021: The cut-off yields in today’s Treasury bill auctions remained unmoved for all maturities despite hint of interest rate peak out by State Bank of Pakistan in yesterday’s Monetary Policy Statement.
Since inflation reading of 11.5 percent for the month of November 2021, across all tenors, secondary market yields, benchmark rates and cut-off rates in the government’s auctions have risen significantly. SBP termed this increase appeared unwarranted.
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Stagnant cut-off yields of treasury bills will likely to affect the performance of KSE-100 that gained 1,120.5 points in today’s trading session to close the day at 44,386.66 according to data published by Pakistan Stock Exchange. Meanwhile, fixed income secondary market yield of paper dropped notably in today’s trading session.
Both equity and fixed income markets rebounded as the Monetary Policy Committee noted that recent data releases confirm that the emphasis of monetary policy on moderating inflation and the current account deficit remains appropriate. Following rate increase of 100 basis points to 9.75 percent and given the current outlook for the economy, and in particular for inflation and the current account, the MPC felt that the end goal of mildly positive real interest rates on a forward-looking basis was now close to being achieved. Looking ahead, the MPC expects monetary policy settings to remain broadly unchanged in the near-term, the statement added.
SBP raised PKR 1,378 billion through auction of market treasury bills.
The government received total bids of worth PKR 2,212 billion and the highest bids of PKR 1,420 billion for 3 Month T-bills followed by PKR 552 billion for 6 Months and PKR 186 billion for 12 Months.
Cut-off yield clocked in at 10.7849 percent for 3-M, 11.5001 percent for 6 month paper and 11.5143 for 12 month paper, which were similar to the cut-off yields in the previous auction held on 1st December 2021.
Mostly raised in 3 Months which was PKR 842 billion followed by 6 Months of PKR 441billion and 12 Months of PKR 96 billion. The target for the auction was PKR 1,400 billion.
