T-bills, PIB yields fall

KARACHI: Treasury bills (T-bills) and Pakistan Investment Bond (PIB) yields fell on Friday after the State Bank of Pakistan (SBP) conducted a 63-day open market operation (OMO) for a first in recent years to give the market a signal of stability, analysts said.

The SBP conducted a seven and 63-days OMO (injection). There, amount offered was Rs1,086 billion in 7-days and Rs753 billion in 63-days. The center bank picked Rs1,086 billion at 9.82 percent in 7-days and Rs689 billion at 9.90 percent in 63-days.

“After this recent move by the SBP, yields in money markets are down by 34-40 basis points to 10.27 percent and 11.07 percent, for three-month and six-month papers, respectively,” said an analyst at Topline Securities.

PIBs also have rallied with the yield falling by 10-13 bps on three and five-year bonds, to 11.53 percent and 11.58 percent, respectively, he added.

“We think overall economic numbers especially CPI [consumer price index inflation], current account deficit, FX (foreign exchange) reserves along with timings of IMF (International Monetary Fund) programme resumption will remain a key determinant of interest rate movement going forward. Moreover, the SBP’s OMO injections will also play a key role. The SBP, in its recent monetary policy statement, said that across all tenors, secondary market yields, benchmark rates, and cut-off rates in the government’s auctions had risen significantly.

The MPC (marginal propensity to consume ) noted that the increase appeared unwarranted. In spite of that, yields in the last T-Bill auction remained the same while in secondary markets it went up by 20-30 bps after the auction.