12-month T-bills slump to 14-month low

The rate of return on the 12-month T-bill in the secondary market slumped to a 14-month low, falling below 20% on Thursday in anticipation of a deeper cut in the central bank’s key policy rate (interest rate) in early June 2024. The yield on the one-year T-bill reduced by up to 90 basis points or more in the secondary market following a similar situation seen in the paper auction held at the primary market on Wednesday. The yields in Wednesday’s auction—held after a two-week gap—dropped in anticipation of a significant slowdown in inflation reading to 13-13.5% in May 2024, compared to a two-year low at 17.1% in April and a multi-decade high at 38% in May 2023. While speaking to The Express Tribune, Saad Hanif, Head of Research at Ismail Iqbal Securities, said discussions with treasury firms suggest that financial markets are expecting a 200 basis points cut in the policy rate to 20% in June 2024, compared to the record high 22% since June 2023.