Treasury bill yields are expected to peak around 30% to 33.5%, GCB Capital has projected.

This is coming after the yield on the 91-day T-bill hit 29.81%, whilst that of the 364-day bill also reached 33.42%.

It pointed out that while the Treasury’s primary market activity will remain concentrated around the front end of the Lower Currency Yield (LCY) curve as the domestic bonds market remains shut amidst the attractive T-bill yields.

Again, it expects nominal yields to ease once inflation declines sufficiently.

GCB Capital added that the ongoing fiscal adjustments towards restoring fiscal and debt sustainability and macroeconomic stability will further support disinflation and quicken the decline in nominal yields.

“We expect the disinflationary trend to continue and we tip the November 2023 print to come in 33%, barring any significant pass-through from cedi depreciation to inflation. Thus, real returns on T-bills could improve sufficiently, potentially limiting the upside risks to nominal yields”, it pointed out.

From the peak of around 35.5% pre-DDEP, T-bill yields declined sharply over the three auctions that followed, with the benchmark 91-day settling at 18.52% at auction 1842 held on March 17, 2023.

However, amidst the heightened inflation risks, which resulted in pronounced negative real return, the apparent macroeconomic risks and the increased appetite for short-term funds due to limited funding options for the government reversed the sharp decline in yields thereafter.

GCB Capital concluded that normal yields are near, with headline inflation which is down 16% YTD to 38.1% in Sept-23 amidst an improving outlook, we believe nominal yields are near their peak.