Treasury bill rates plunged

Treasury bill rates plunged at the latest auction to raise $1.4 billion for Government of Jamaica held today.
At the latest Treasury bill auction the rate on the 91 days bill declined by just over 58 basis points to just 1.9596 from to 2.544 percent at the June auction, while the 182 days instrument average rate dipped 65 basis points to 2.07 percent from 2.656 percent from the June Auction. The two offerings of $700 million each attracted a total of just over $6.2 billion up from $5.3 billion in June, an indication of continued high liquidity in the market. The latest fall in rate follows a recent 50 basis point drop in Bank of Jamaica’s (BOJ) overnight rate to 2 percent and is almost certain to trigger another cut in the BOJ overnight rate.
The continued fall in rates comes against the back ground of negative inflation of 0.3 percent for the first half of the year. The sharp fall in rates is bound to be reflected in increased demand for stocks and real estate going forward as investors seek higher returns on their investments. Technical indicators point to a big break out for local stocks starting in August and the recent fall in rates will be a critical fuel for it.

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