Lower interest rates ahead

August 27, 2017 by

Treasury bill rates on the decline and heading lower.

Investors chased $1.8 billion in Government of Jamaica Treasury Bills on offer on August 16 and pushed down the rates lower than in July, in the process.
The fall in rates helped the country’s central bank to lower its new benchmark overnight rate, by 25 basis points to 3.5 percent effective Friday August 25. The Treasury bill offerings, in tranches of $600 million each, replace $1.32 billion that matured in August. The offers with maturities of 91 days, 182 days and 273 days, resulted in average rates of 5.49 percent for the 91 days instrument, down from 5.63 percent in July, 5.99 percent for the 182 days bill down from 6.13 percent, with the 273 days bill, clearing at an average of 6.32 percent down from 6.5 percent in May.
The trend in interest rates is clear, with the downward drift resuming and needs to break below 5.8 percent for a sustained decline to take hold. It will only be a while, for Treasury bill rates to hit 4.5 percent but that is unlikely to happen until 2018. The accompanying chart shows the movement in the 182 days Treasury bill rate in red within a downward sloping channel pointing to lower rates ahead.

Filed Under: Economy, Feature Stories, Money Market Tagged With: ,

GOJ Treasury bill heading to 4%

March 6, 2017 by

Government of Jamaica Treasury bill rates seems headed to 4 percent by early 2018 if current trends on inflation, exchange rate stability and world oil prices hold.
Treasuries hit just over nine percent for the 182 days instrument in 2014. The rates declined thereafter, falling to a low just below six percent in late 2015 and moved sideways to October last year and then rose to six and half percent by December. Rates at the January and February auctions fell.
In contrast to falling rates for the 182 days T-bills, rates on the short-term bills rose at the February auction. The 91 days T-bill closed at 5.92%, up from 5.62% in January while the 30 days ended at 6.08% up from 5.64% in December.
The trend seems clear with inflation falling to 1.7 percent last year and running at 2.6 percent to January compared to same period in 2016 signalling room for much lower rates. The chart of Treasury rate trends, points to a declining trend with the two blue lines indicating the upper and lower band.
During 2016 inflation was negatively affected b a 7 percent decline in the value of the Jamaican dollar against the United States currency, that would have contributed to most of the inflation except the portion relating to increased taxes, imposed last year. Devaluation if any, should be more moderate in 2017, as foreign exchange flows continue to be strong, therefore inflation should moderate with the absence of devaluation of the local dollar.
The trendline suggests rates on T bills falling to 4 percent by late 2017 or early 2018. The chart is also showing that rates could sit at resistance around the 5.7 percent level for awhile but the downward slopping trend lines are pointing to lower rates by the latest August, with softening world oil prices and little or no devaluation of the Jamaican dolllar to spike inflation.

Filed Under: Economy, Feature Stories Tagged With: , ,

Stocks shrug off interest rate rise

November 17, 2016 by

Ja inf-stks 11-16.The latest issue of Treasury bill offerings saw the 182 instrument climbing 40 basis points to 6.2 percent while the 91 days T-bill rose marginally to virtually hold at 5.70 percent just a tad above the average in October.
The 28 day T-bill slipped from 5.78 percent to 5.70 percent. At the same time the main market All Jamaica Composite index continues to climb with some companies posting good increased profits.
The rise in the 192 days instrument comes against the back drop of stability in the exchange rate for November to date, very low inflation that seems headed to around than 2 percent for 2016. The change in rates also comes against the change in Bank of Jamaica policy to offer Certificate of Deposits daily to the market to bid on.

Filed Under: Economy, Feature Stories, JSE Main Market, Money Market, Stock Market Tagged With: , , , , ,

2016 T-Bill rates slow JSE gains

October 20, 2016 by

TB 10-16Rates on Treasury bill slipped in the latest issues for October with the 91 days instrument coming in at 5.7 percent, down from 5.86 percent in September and the 28 days falling to 5.78 percent a decline from 5.84 percent previously.
The 192 days Treasury bill rate inched up from 5.81 percent to 5.83 percent. The latest rate out turn, comes off changes in rates with the 192 days instrument rate at 5.75 percent February 2013, rising to hit 9.11 percent in March 2014 and been on the decline since, with a few minor hiccups along the way. The trend continues downwards with the rate of decline having slowed markedly with the Bank of Jamaica repo rate set at 5.25 percent since May.
In June, the 192 days rate climbed to 6.01 percent from a 2016 low of 5.73 percent in February, at the same time, the 91 days instrument, fell to 5.65 percent in April and moved up to 5.86 in June and September. The 28 days T-bill fell to a 2016 low of 5.37 percent in April but rose to 5.95 percent in August.
The stock market has been heavily influenced by the decline in interest rates in late 2014 to the end of 2015 has struggled since, with rates being flat in 2016 with a few cases of it having risen.

Filed Under: Economy, Feature Stories, JSE Combined, Money Market, Stock Market Tagged With: , , ,

Interest rates drop

March 2, 2016 by

Interest rates payable on the latest round of Treasury bill instrument offered by the Government of Jamaica, declined but the 28 days instrument plummeted by 50 basis points to 5.54 percent from 6.04 percent out come at the January auction.
TBill 02-16The 182 days instrument fell by 21 basis points to 5.73 percent but the 91 days instrument climbed back above the 6 percent mark to end at 6 percent, up from 5.94 percent in January.
Treasury bill Interest rates are coming from a high of 9.11 percent on the 182 days instrument, in March 2014 and has been falling since. The latest rates are the lowest since the early 1980s.
The issues were for a total of $400 million each, with the 28 days instrument attracting $569,799,800, the 91 days one pulling in only $418,580,000 and the 182 days instrument attracting $671,724,700.

Filed Under: Economy Tagged With: , ,

21% fall in Treasury bill rates in a year

September 17, 2015 by

Treasury bill rates are continue to decline with the latest ones falling ones continuing the trend once more. Rates are down 20.6 percent on the 182 days Treasury bill notes since September last year or 165 basis points.
Rates on the latest issues of Treasury bill that were on offer on Wednesday September 16th, continued a slow decent since the start of 2015 but a much steeper decline form March last year. Tbill mnt 16-9-15The two offerings for $400m each attracted bids for $721.8 million for the 91 days instrument and $786 million for the 182 days instrument, down from over $940 million each in August.
The 91 days instrument cleared at an average of 6.2 percent down from 6.352 percent at the August auction, with bids between 5.99 percent, to 6.3 percent being fully accepted. The 182 days yielded an average 6.35 percent down from August’s average of 6.49 percent. Bids between 6.2 to 6.4 percent, were fully allotted. Earlier, at the September 9th auction, the 28 days Treasury bill average rate came out at 6.228 percent after $707 million chased $400 million on offer.
The declines for the September issues come against the back ground of Bank of Jamaica cutting by 0.25 percent, its 30 days CD rates in August to 5.25 percent.

Filed Under: Breaking News, Economy Tagged With: ,