Treasury bill yields plunge as SVB collapse affects interest rate view

Short-term instruments, such as T-bills, are extremely sensitive to interest rate expectations

After skyrocketing in the first 11 weeks of 2023, yields on the government’s Treasury Bills (T-bills) recorded a sharp decline on Wednesday as instability in global markets following the collapse of US-based Silicon Valley Bank (SVB) led to anticipation of central banks going slow on further tightening.

At Wednesday’s primary sale, the cutoff yields on 91-day, 182-day, and 364-day T-bills were set 11-17 basis points lower than the previous week’s auction.

With the collapse of the SVB triggering turbulence in the US and European banking sectors, the view among traders is that central banks such as the Federal Reserve would