Post by account_disabled on Feb 28, 2024 4:17:17 GMT -6
When in January dozens of individuals, most of them retired, queued early in the morning outside the Bank of Spain to buy Treasury bills, they had six times more reasons to do so than to stay at home. That was at least the multiple by which the profitability of bills, of 2.8%, exceeded that of bank deposits, of 0.46%, at that time. Seeing something renting around 3% on those winter mornings was quite an event that deserved a good early start. Six months later, bills are still a better investment than deposits, but the gap appears to have started to narrow. For now, they no longer perform six times more, but 50% more. They are remunerated at 3.7%, compared to an interest offered by banks that in June was 2.22% and is increasing.
In percentage terms, in January the difference was more than 2.3 points and now it is less than 1.5 points, in the absence of the Bank of Spain updating bank remuneration with the Job Function Email Database data for July and August. While banks begin to make an effort little by little to capture money from clients, the Treasury is managing to lower the interest on bills for the first time so far this year. Yesterday it placed nine-month bonds at 3.7%, below the 3.81% a month before, thanks to greater demand and while the market begins to anticipate that there will not be many more interest rate increases. «The profitability of bills may be reaching its peak» Auriga Bonos analysts agree on this point.
We believe that the profitability of this asset may be reaching its ceiling,” they indicate in a report. Last week the Treasury placed the one-year bills at 3.68%, also below the previous auction, thus moving this type of debt away from the 4% it was approaching. There is another trend. While the longer-term bills, those of twelve and nine months, lower their profitability, the short-term bills, which are three and six months, maintain it or increase it. This narrowing of the difference between the long and short term is a new indication that investors are now betting on a stabilization of interest rates. In yesterday's auction, the Treasury placed three- and nine-month bills for 2,047 million euros, in the middle range of its objective of trading between 1,500 and 2,500 million. It is little more than the 1,980 million issued a month before.
In percentage terms, in January the difference was more than 2.3 points and now it is less than 1.5 points, in the absence of the Bank of Spain updating bank remuneration with the Job Function Email Database data for July and August. While banks begin to make an effort little by little to capture money from clients, the Treasury is managing to lower the interest on bills for the first time so far this year. Yesterday it placed nine-month bonds at 3.7%, below the 3.81% a month before, thanks to greater demand and while the market begins to anticipate that there will not be many more interest rate increases. «The profitability of bills may be reaching its peak» Auriga Bonos analysts agree on this point.
We believe that the profitability of this asset may be reaching its ceiling,” they indicate in a report. Last week the Treasury placed the one-year bills at 3.68%, also below the previous auction, thus moving this type of debt away from the 4% it was approaching. There is another trend. While the longer-term bills, those of twelve and nine months, lower their profitability, the short-term bills, which are three and six months, maintain it or increase it. This narrowing of the difference between the long and short term is a new indication that investors are now betting on a stabilization of interest rates. In yesterday's auction, the Treasury placed three- and nine-month bills for 2,047 million euros, in the middle range of its objective of trading between 1,500 and 2,500 million. It is little more than the 1,980 million issued a month before.