The persistent rise in Treasury bill yields to around 4% seems to have come to a halt for now thanks to strong demand and forecasts that interest rates will not rise much beyond the current 4.25%.
The Treasury has placed this Wednesday letters to three and nine months for 2,047 million euros, in the medium range of its objective of marketing between 1,500 and 2,500 million of these products. At last month’s auction, it put 1,980 million on the market.
The novelty is that for the first time so far this year, nine-month bills have lowered their profitability. The marginal rate was 3.7%, below the 3.81% of the previous auction, after registering a higher demand.
The nine-month bills issued have been equivalent to 1,524 million, a figure similar to the 1,521 million of the previous auction. However, the demand now has been 3,462 million, more than double, which did not happen a month ago, when it was at 2,876 million, according to the Treasury.
The volume of non-competitive demand for nine-month bills has improved slightly, which is what usually comes from individual investors, who are generally more interested in twelve-month bills. This time it was 373 million, compared to 341 million a month earlier.
Three-month bills have also been placed today, with a yield of 3.53%, the same as a month ago. 523 million have been issued, compared to 459 million in July, with a demand of 1,889 million, also very similar to the 1,884 million of the previous auction.
Last week the Treasury placed six and twelve-month bills for 4,838 million and also managed to lower the profitability of the second of these two types of debt for the first time so far this year. Twelve-month bills have cut their marginal interest to 3.8%, compared to 3.68% in the previous auction, while six-month bills raised it to 3.66%, compared to 3.62%.
The result of that auction and today’s is that the long-term debt is lowered, while the short-term is maintained or rises. In short, the temporary differences are narrowing, which is an indication of greater stability in the public debt market.
The profitability gap between bills and bank deposits is also narrowing. Banks rewarded savings at an average of 2.22% in June, compared to 1.4% two months earlier, and are beginning to make an effort to attract money from customers due in part to the reduction in liquidity in the system after the repayment of special ECB loans during the pandemic.
