Last opportunities to buy bills above 3%

Opportunities to take advantage of Treasury bills yielding above 3 percent may be running out.

The market expects that The European Central Bank will cut interest rates sometime in the first half of 2024.which leads to a fall in the yield of government debt.

Thus, the yield on 12-month Treasury bills fell from 3.862 percent, which it reached in October, to 3.293 percent at the last auction of this type, held on January 9. That is more than half a point in just three months.

Thus, It is possible that the upcoming 6-month and 1-year note auction, scheduled for Tuesday, February 6, will be one of the last with 12-month yields above 3 percent..

Letters last 6 months

In the case of the six-month notes, they may still be able to last a little longer above the 3 percent level since the last issue of the same type was placed at an average rate of 3.580 percent, giving some room to stay above those levels.

Application deadlines

In any case, people wishing to attend this auction will only be able to do so in person at the Bank of Spain, since the deadline for online applications expired on January 30.

Physically, they have until February 5, Monday, to do this.

Otherwise, they have another opportunity to buy 3- and 9-month bills on February 13; and 6 and 12 months – March 5, although it is difficult to predict what returns will be achieved in these issues.

Declining profitability

Because while experts have predicted some stability in yields, given the ECB’s reassurance that it will keep rates at these levels for as long as necessary to contain inflation, the truth is that yields have not stopped falling.

That same week, the Treasury held an auction of long-term debt (government bonds and bonds), which again saw yields fall.

Specific, The 30-year bond yield fell from 4.465 percent to 3.693 percent.; while 3- and 5-year bonds fell from the psychological level of 3 percent.

For three-year bonds, they lowered the interest rate from 3.245 percent to 2.582 percent; for five-year obligations – from 3.137 percent to 2.621 percent.

The market expects a rate cut

And, no matter how the European Central Bank tries to dispel speculation about a possible cut in interest rates in the short term, part of the market believes that the first cut could occur as early as April.

One professional with this view is Robert Schramm-Fuchs, European equities manager at Janus Henderson Investors: “ECB President Ms Lagarde appears to have left the door firmly open for the start of a rate cut cycle in April, highlighting the importance of renewed expert advice. forecasts that will be available in March.”

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