Last week Tbill 91 day rate slid by 86.4bps. This week the rate has slumped by 168.4bps! This has pushed the yield below the 2012 low to stand at 8.583%. The spread between CBR and the 3 tbill classes is now too wide and most likely with inflation now below 9% threshold should make CBK confident enough to cut CBR. Looking at the 91 day yield smackdown, finally CBK is sending strong signals to tbill hoarders that its time to jump off the ship... The bills are no longer offering attractive inflation beating spreads. Most likely a 300bps CBR cut will be favoured. The higher the better to inject more liquidity in the econ which will also bang down those 20s% high lending rates. And as @guru has said, counters with high dividend yields will definitely rally.
@deal - seems Volcker's play book was modified just slightly by CBK... I still see NSE testing 4000 * 4200 before the year ends as the final upthrust. Were 2013 without elections then 4400 would be the target for 2012 assuming CBR is cut by 300bps or more. I don't like the idea of the election in March 2013 when majority of the firms are announcing full year results. On the flip side if elections are smooth sailing then the delayed momentum between Dec and March will be quickly spring up in April. Looks like March 2009 repeat. Notable party spoiler - euroland debt bomb... Keep an eye on it.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!