Ultra-short-term borrowing costs rise as T-bill yields hit highs
In short
India’s 182-day and 364-day treasury bill yields rose to 18-month highs at Wednesday’s auction. Their gap over the RBI’s 5.5% repo rate also hit its highest level since November 2022. The report said traders expect more tightening after the RBI’s recent rate hike and hawkish guidance.
This matters because higher short-term borrowing costs can affect government funding costs and bond yields. The reporting did not say how much tighter policy will get next.
What the reporting says
India’s 182-day and 364-day treasury bill yields climbed to 18-month highs at Wednesday’s auction, while their premium over the RBI’s 5.5% repo rate reached the highest level since November 2022. The reporting said investors are pricing in further monetary tightening after the RBI’s recent rate hike and hawkish guidance, and treasury officials expect borrowing costs and government bond yields to stay under pressure. The exact next policy move remains unknown.
Why it matters
At Wednesday’s auction in India, 182-day and 364-day treasury bill yields rose to 18-month highs, and the spread over the RBI’s 5.5% repo rate reached a four-year high, according to the publisher-supplied summaries. Market participants cited recent rate hikes and hawkish guidance as reasons investors expect more tightening. Treasury officials also expect short-term borrowing costs and government bond yields to remain elevated.