This archive report was first published on 17 July 2020.
On July 17, 2020, the Central Bank of Kenya's monetary policies were expected to influence the yields on government securities.
According to KCB Capital analyst Mercyline Gatebi, the uncertainty in the market had raised appetite for short-term securities, leading to a 70 basis point fall in rates since the beginning of the year.
Gatebi noted that the high liquidity and increased investments from financial institutions, which were shying away from aggressive lending, would sustain demand for short-term papers and exert pressure on yields.
NCBA analysts also pointed out that investors were aggressively seeking assets providing a reasonable risk-return balance due to the unfavourable shift in the investment landscape caused by the Covid-19 pandemic.
As a result, yields on government securities were expected to fall further in the current quarter, with a potential cut of 30-50 basis points on the short-term end of the yield curve in the third quarter.
