Yield Curve Heading Higher, Especially At The Short End

Our long-held view that the yields on Kenyan local government debt will rise over the course of 2011 has been reinforced by the March 22 rate hike in response to rising inflation and an impending increase in the supply of government paper. With real yields at the short end of the curve in negative territory, we believe that the sub-five year instruments will be the most susceptible to a sell-off.

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