DAILY MARKET INSIGHTS 07.08.2026

MARKET DATA

Source: cornerstone Asset Managers

MARKET NEWS

Treasury Bill Auction

This was a very strong auction. The government offered UGX 350 billion and received bids worth approximately UGX 766.5 billion. Out of the bids submitted, about UGX 381.1 billion was accepted while about UGX 385.4 billion was rejected. The large volume of rejected bids shows that investor demand was much stronger than the Government’s immediate funding requirement, allowing authorities to be highly selective on pricing.

Most Preferred Tenor

The 364-day Treasury Bill attracted by far the highest demand. Investors submitted roughly UGX 646.6 billion for the one-year paper, accounting for the overwhelming share of total bids received. This suggests investors were willing to lock in returns for a longer period rather than remain concentrated on short-dated instruments.

Why Investors Favored the 364-Day Tenor

Several factors likely explain the strong interest in the one-year tenor. First, investors may expect rates to decline further in coming months, making it attractive to secure current yields for a longer period. Second, the one-year bill offers greater income certainty compared to repeatedly reinvesting in shorter maturities. Third, institutional investors such as banks, pension funds and asset managers often prefer longer-dated government securities when liquidity conditions are comfortable, and inflation expectations remain stable.

Why Rates Continue to Come Down

The main driver of lower rates is excess demand. With bids more than double the amount offered, the Government did not need to accept expensive funding. Investors competed aggressively for allocation, resulting in lower clearing yields. The strong demand across all tenors, especially the one-year bill, indicates ample market liquidity and confidence in government securities. As long as investor demand remains stronger than the Government borrowing requirement, downward pressure on rates is likely to persist.

Take Home.
The auction outcome was favorable for the Government. Funding needs were comfortably met; investor’s participation remained exceptionally strong, and the one-year tenor emerged as the preferred maturity. The combination of strong subscription levels and significant bid rejections reinforces the view that market liquidity remains abundant and continues to support lower Treasury bill rates.

Disclaimer: This newsletter is for information purposes only and does not constitute investment advice. Past performance does not guarantee future results