T-Bills yields return to single-digit territory, After a four-year gap

After a four-year gap, cut-off yields on Pakistan’s short-term government papers have returned to single-digit territory.

At Wednesday’s auction, cut-off yields on 3-month and 6-month Treasury Bills fell back to single digits, a level last seen in November 2021. The 12-month T-bill, however, was cut off slightly higher at around 10 percent.

The State Bank of Pakistan (SBP) on Wednesday conducted auction for the sale of sale of 01-Month, 03-Month, 06-Month & 12-Month Government of Pakistan Market Treasury Bills (MTBs) through Primary Dealers on January 21, 2026 with settlement date of January 22, 202. Overall, SBP received bid worth Rs 1.849 trillion for the sale of MTBs, however accepted Rs 725.702 billion including Rs 293.2 billion competitive and Rs 432.5 billion Non-Competitive.

In the auction, cut-off yields across all tenors moved lower. The 1-month T-bill yield fell by 30 basis points (bps) to 9.8996 percent, while the 3-month cut-off declined by 25.1 basis points to 9.8995 percent. The 6-month T-bill was set at 9.9492 percent, down 21 basis points. The 12-month tenor also eased by 16 basis points and was fixed at 10 percent.

According to Ali Najib, Deputy Head of Trading, Arif Habib, notably, yields across all maturities now stand at a 4.2-year low, underscoring a clear shift in the interest-rate cycle.

Cut-off yields for Pakistan’s 3-month and 6-month Treasury Bills have reverted to single-digit levels in the auction held on Wednesday, a milestone last witnessed in November 2021, while the 12-month tenor cleared marginally higher at 10 percent, he added.

He mentioned that the downward movement reflects cooling inflation expectations, improving macro stability, and a decisively dovish monetary policy outlook amid expectations of continued easing by the SBP.

For perspective, the last comparable yield environment was observed in Nov’21, when cut-offs averaged approximately 8.5 percent for both 3M and 6M, and 7.6 percent for 12M securities.

Overall, the latest auction outcome signals strong demand for government paper, reinforcing confidence in the ongoing disinflationary trend and strengthening expectations of further normalization in the yield curve, Najib mentioned.