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Gold shines on renewed US fiscal stimulus talks

December 2, 2020 (MLN): Gold prices jumped on Wednesday on renewed US fiscal stimulus package talks. Moreover, a weaker US dollar also supported the yellow metal. In the international market, the price of gold went up by US $30 and traded at US $1,831 per ounce while silver was pegged at US $24.26 an ounce.

On the domestic front, the price of 24 karat gold also soared by Rs 1,600 to Rs 113,800 in the bullion market. The precious yellow metal of 24-Karat had closed at Rs 112,200 per tola on the last day.

According to the data released by the All Sindh Saraf Jewellers Association, the price of 10-gram gold also increased by Rs 1,372 to Rs 94,993 against the price of Rs 93,621 reported in the previous session.

On the other hand, the price of silver tola and 10-gram silver remained unchanged at Rs 1200 and Rs 1,028.80 respectively, the association reported.

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Auction Result: SBP Sells T-Bills worth Rs.404.63 Billion

December 02, 2020 (MLN): The State Bank fo Pakistan(SBP) conducted an auction on Wednesday in which it sold Market Treasury Bills (MTBs) worth Rs.404.63 billion for 3, 6 and 12 months.

Auction target was Rs.350.00 billion against a maturing amount of Rs.429.20 billion.

Cut off yield for 3, 6 and 12 months were 7.1408, 7.1849 and 7.2989 percent.

Total amount offered was Rs.763.84 billion out of which the SBP accepted Rs.382.35 billion. The SBP received bids worth Rs.673.84 billion for 3 months, Rs.60.00 billion for 6 months and Rs.30.00 billion for 12 months out of which it accepted Rs.322.35 billion, Rs. 50.00 billion and Rs.10.00 billion respectively.

In addition the SBP picked up Rs.22.28 billion from the non-competitive auction, making the total amount accepted Rs.404.63 billion.

 

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PIB Auction: Bid Pattern (Floating Rate)

December 02, 2020 (MLN): SBP released the Bid pattern for today's Auction of Quarterly payment PIB (Floating Rate).

Combined Auction Target is Rs.140.00 Billion for 3, 5 and 10 year Bonds, which will be a fresh issue for the Semi-Annual Coupon bond and a re-opening of the Oct 22, 2020 issue for quarterly coupon bonds while the 2 year PIB is re-opening of Nov 05, 2020 issue.

Semi annual PIB coupon rates are 7.1959 percent for 3, 5 and 10 years.

Quarterly PIB coupon rates are 7.1402 percent for 2 years and 7.1178 percent for 3, 5 and 10 years.

Link to Full Bid Pattern (Quarterly)


* Link for Semi Annual PIBs bid pattern will be added as soon as published by SBP.

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MTB Auction: Bid Pattern

December 02, 2020 (MLN): The State Bank of Pakistan released the Bid Pattern for today's MTB Auction.

Auction target is Rs.350.00 billion against a maturing amount of Rs.429.20 billion, showing a net retirement of Rs.79.20 Billion.

Link to Full Bid Pattern

In the previous auction cut off yield for 3, 6 and 12 months was 7.1525, 7.1998 and 7.2498 percent.

 

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CPI Review: Inflation to continue moderation in short-to-medium term

December 2, 2020 (MLN): The headline inflation for the month of Nov’20 decelerated to 8.35%YoY and 0.82% MoM, compared to 8.91% YoY and 1.7% MoM in the previous month, bringing the 5MFY21 CPI inflation to 8.76% YoY.

To highlight, this inflation figure came in slightly higher than market expectations, despite higher base effect.

The reasonable easing in November’s inflation figures has been witnessed mainly on the back of declining pace of inflation in food group and deflationary trend in housing and transportation index.

The Food & Non-Alcoholic Beverages inflation slowed down to 1.92% MoM from 3.90% in Oct’20, whereas, on yearly basis, the food index spiked to 15.1% YoY during the month. Moreover, a detailed examination of the key components within the group reveals that most of the increase in Food inflation was attributed to Chicken and vegetables. The price of chicken surged by 21.36% MoM, while Tomatoes by 15.68% MoM and Potatoes by 8.79% MoM. On the other hand, pressure on wheat and flour prices dropped by 4.83% and 4.1% MoM respectively.

The respite in inflation of transportation index came on the back of decline in motor fuel prices and transportation services by 2% and 2.25% MoM in the group respectively, which declined the overall group’s inflation by 2.25%.

Similarly, Power charges under Housing group declined 3.20% MoM and increased 9.89% YoY, dragging the overall Housing rent, Water, Electricity, Gas & other group inflation by 0.08% MoM in Nov’20.

On the other hand, the Core inflation remained firm during the month, particularly core urban inflation which remained unchanged at 5.6% YoY in Nov’20. While, a slight improvement in Core rural inflation has been recorded as it improved by 7.4% YoY, compared to 7.6% YoY in October and 7.8% YoY in September 2020.

Outlook:

With the recovery in international oil prices amid vaccine hopes and extension in production cuts, further revision in POL prices domestically is expected under the revised mechanism. The same is expected to support headline inflation in the coming months, says Taurus Securities.

Another report by Arif Habib Securities expects headline inflation to continue moderation in monthly inflation trend. One major factor supporting this expectation of contained inflation in short-to-medium term is reversal in volatile food prices.

To recall, SBP in its recent MPS kept policy rate unchanged and highlighted that there seems little to no threat on inflation from the demand side as aggregate demand still remains subdued thus, negating the fear of over-heating of the economy.

The core inflation, on the other hand, has been relatively stable. This should help SBP maintain status quo in the next MPS as well which is due in January’21, the report added.

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