Egypt treasury bond yields tumbled at an auction on Monday on expectations the central bank would cut its overnight interest rates at a monetary policy meeting on Sept. 19.
Fixed-income dealers believed the central bank would decrease rates by a full 100 basis points at the Thursday meeting, said one trader.
But economists at four investment banks polled by Reuters were forecasting drops ranging from 25 to 100 percent.
‘The markets are excited about the monetary policy committee on Thursday,’ said the trader. ‘Plus the markets are considerably liquid, so that helps translate this excitement into strong appetite for government debt.’
The average yield on five-year bonds dropped to 11.715 percent from 14.63 percent at the last auction on Sept. 2, while the yield on 10-year bonds slid to 14.398 percent from 15.96 percent.
The central bank said it accepted bids worth 1.5 billion Egyptian pounds ($217.6 million) for the five-year bonds and 1.5 billion pounds for the 10-year bonds, the entire amount it had offered.
The central bank introduced a new 18-month note, accepting bids worth 1 billion pounds at an average yield of 10.745 percent.