Treasury bills, GDP yields fall
KARACHI: Yields on T-bills and Pakistan investment bonds (GDP) fell on Friday after the State Bank of Pakistan (SBP) conducted an open market operation (OMO) 63 days for a first in recent years to give the market a signal of stability, analysts said.
The SBP performed an OMO (injection) of seven and 63 days. There, the amount offered was 1,086 billion rupees in 7 days and 753 billion rupees in 63 days. The central bank chose Rs 1,086 billion at 9.82% in 7 days and Rs 689 billion at 9.90% in 63 days.
“After this recent SBP move, money market yields fell 34-40 basis points to 10.27% and 11.07%, respectively for three- and six-month securities,” said an analyst at Topline Securities.
GDPs also recovered, with yields falling 10 to 13 basis points on three- and five-year bonds to 11.53% and 11.58% respectively, he added.
“We believe that the overall economic figures, in particular the CPI [consumer price index inflation], the current account deficit, foreign exchange reserves (foreign currency) as well as the timing of the resumption of the IMF (International Monetary Fund) program will remain a key determinant of the movement of interest rates in the future. In addition, OOM injections from the SBP will also play a key role. The SBP, in its recent monetary policy statement, said that across the top secondary market yields, benchmark rates, and cutoff rates in government auctions have risen dramatically.
The MPC (marginal propensity to consume) noted that the increase seemed unwarranted. Despite this, the yields from the last treasury bill auction remained the same while in the secondary markets they increased by 20 to 30 basis points after the auction.