Short-term yields mostly up

Lingering uncertainties over aggressive tightening in the US and domestically pushed up most of the interest rates for short-term Philippine debt papers.

At the Bureau of the Treasury’s auction on Monday, May 2, the yield for the 91-year Treasury bill, which banks use to price their loans, went up to 1.272 percent from 1.140 percent in the previous week.

Investors were willing to buy as much as P10.536 billion of the three-month papers, more than double the government's offer of P5 billion. The Treasury made a full award.

The rate of the one-year IOU also inched up to 1.933 percent from 1.901 percent during the auction last week.

The bureau, however, made a partial award of its P5 billion offer, amounting to P2.613 billion, due to weak demand with only P4.613 billion tenders.

Meanwhile, interest rates on the 182-day T-bill declined to 1.500 percent from the previous 1.558 percent with total tenders for the six-month paper amounting to P8.582 billion, of which the government accepted P5 billion as planned.

National Treasurer Rosalia V. De Leon said investors sought for higher interest rates as market immersed in both US Federal Reserve and Bangko Sentral ng Pilipinas (BSP) aggressive tightening rhetoric.

“Powell open to front-loading rate hikes combined with balance sheet runoff to cool down overheating prices ,” de Leon said, referring to US Fed Chair Jerome H. Powell.

“Onshore, inflation for April likewise seen to settle higher at 4.6 percent,” de Leon added.

Last week, the BSP estimated that inflation may range between 4.2 percent and five percent in April, mainly driven by rising prices of energy and food.

The central bank’s forecast is quicker than the four percent record in March and above the government’s target band of two percent to four percent.