Sharp Daily
No Result
View All Result
Wednesday, July 30, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Investments

Surging Demand for 91-Day Treasury Bills Leads to Unprecedented Yield Inversion

David Musau by David Musau
August 7, 2023
in Investments, News
Reading Time: 2 mins read

In a striking development in the financial markets, the yields on the 91-day Treasury Bills have surged, surpassing those of the 182-day T-bills, creating a rare inversion on the shortest end of the government’s yield curve. This unexpected situation has left the Treasury grappling with elevated finance costs in the short term, as the performance of the 91-day paper outpaces its longer-duration counterparts.

Recent auctions have witnessed a remarkable trend, with investors displaying an increased appetite for the shorter-duration 91-day Treasury Bills. As a result, the interest rate on the 91-day T-bill reached its highest level in the last nine years, while the rates on the 182 and 364-day papers are now at levels last observed in February 2016. During the most recent auction, the interest rate on the 91-day T-bill skyrocketed by 33 basis points to 12.68 percent, with the 182-day T-bill rising by 16 basis points to 12.55 percent. Similarly, the rate on the one-year paper surged by 38 basis points to 13.1 percent.

Read  more: Treasury Bills Record Poor Performance in Subscription of 38.1% from 164.5% recorded Last Week

This remarkable inversion has been triggered by a combination of factors. Analysts point to the exceptionally high demand for the 91-day Treasury Bill as a reflection of investor behaviour in response to the prevailing macroeconomic factors and concerns surrounding the government’s debt distress position. Seeking to safeguard their real rate of return, investors are opting for the 91-day paper as a short-term hedge, driving its yields to unprecedented levels. The current market dynamics indicate that investor aggression is further fueled by the government’s pressing need for debt amidst tough macroeconomic conditions. This environment provides an opportunity for investors to leverage their positions and demand higher yields across all government paper issuances.

RELATEDPOSTS

Why firms are shedding jobs despite survival

June 19, 2025

Opinion: Austerity wrong medicine for Kenya’s economy.

June 16, 2025

Looking ahead, market analysts predict that the yields on government paper will continue to rise, driven by a combination of factors such as inflation and increased domestic financing requirements. The recent surprise increase in the base rate to 10.5 percent from 9.5 percent during a June Monetary Policy Committee meeting has further signalled the likelihood of higher rates in the foreseeable future.

Read more: MPC Hikes Interest Rates to 9.5% from 8.75%

However, the Treasury now faces a significant challenge in managing its debt portfolio efficiently, as elevated finance costs pose potential risks to the fiscal budget. Due to this situation, striking a balance between short-term funding needs and long-term debt sustainability is crucial for the government to navigate through this period of heightened market volatility.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

Kenya’s Coffee Export Volume Hits a 14-Year High, Boosting Economic Growth

Next Post

Smaller Banks Face Liquidity Struggles as Interbank Rate rises to 17.1%

David Musau

David Musau

Related Posts

commercial illustrator
News

Why Kenyan private equity firms should consider continuation funds as an exit strategy

July 23, 2025
Analysis

Transferring Your Retirement Benefits Between Pension Schemes in Kenya

July 23, 2025
Investments

Invest in stability: introducing the Cytonn USD money market fund

July 18, 2025
Analysis

Park your money where it grows: Why more Kenyans are turning to Cytonn Money Market Fund

July 16, 2025
Analysis

Nvidia becomes the first company globally to hit USD 4.0 trillion market value

July 10, 2025
Business

Del Monte foods files for bankruptcy in USA

July 3, 2025

LATEST STORIES

Shri Krishana Overseas lists on NSE

July 25, 2025

Why young professionals should care about pensions

July 23, 2025

How Kenya can reinforce fiscal rules to prevent recurrent budget overruns

July 23, 2025
commercial illustrator

Why Kenyan private equity firms should consider continuation funds as an exit strategy

July 23, 2025

Transferring Your Retirement Benefits Between Pension Schemes in Kenya

July 23, 2025

Invest in stability: introducing the Cytonn USD money market fund

July 18, 2025

The Importance of Asset Diversification on Kenyan Pension Funds

July 18, 2025

Park your money where it grows: Why more Kenyans are turning to Cytonn Money Market Fund

July 16, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024