Cut-off yield on 364-day Treasury bill up 7 bps as traders resist to invest

 The cut-off yield on the 364-day Treasury bill has been set 7 basis points higher than the previous week. This shift occurs as traders show reluctance towards investing in short-term papers, due to uncertainty surrounding the domestic rate trajectory.

The Reserve Bank of India has fixed the cut off yield on the 91-day, 182-day, and 364-day T-bill at 6.72 per cent, 6.87 per cent, and 6.93 per cent, respectively.

"Traders are steering clear of shorter-term papers as they no longer anticipate rate cuts within the year," explained a dealer at a primary dealership. "Rate cuts are anticipated in the longer term, which is causing a shift in preference towards these papers."

Expectations for a rate cut have been dampened due to burgeoning inflationary concerns, further heightened by the rise in domestic food inflation and increasing crude oil prices. These factors led to a recalibration of market expectations for a rate cut, pushing the potential timeline for any rate reduction to the second quarter of the next financial year.