Egypt cancelled Monday's 5-year Treasury bond issue, the first cancellation of any treasury sale since August 2014. The average yield on the 10-year bond jumped more than 21 basis points to 15.999% on Monday from 15.788% in the previous auction on 15 February, the finance ministry said. Monday's jump in yields follows significant rises in Egypt's three-month and nine-month treasury bills on Sunday and in the six-month and one-year treasury bills on Thursday. Rising yields suggest the market is speculating a rate hike in the short term following the recent slide of the USD-EGP in the parallel market to a record low as well as the imposition of higher import tariffs on a range of consumer goods. We expect a 50 bps rate hike in 2016 though we want to see more clarity following the government’s announcement of its reform programme, which should contain the proposition for implementing the value-added tax. The latter is a key factor determining the inflation outlook this year. In that respect, we await the announcement of the government’s programme and inflation numbers for February – to be released next week – before updating our short-term view on rates. (Reuters, Mohamed Abu Basha)