Concerns about rising U.S. Treasury yields and inflation, linked to potential protectionist policies under a Trump administration, have led to an increase in short-term government debt interest rates for the sixth consecutive week, despite a slight decline in investor demand.

During the auction on Monday, Nov. 11, the Bureau of the Treasury successfully raised P20 billion from Treasury bills (T-bills), attracting total bids of P59.43 billion—nearly three times the amount available. 

This week’s total bids fell by over P10 billion from last week’s P69.87 billion, breaking the momentum of recent increases.

The Treasury awarded a total of P6.5 billion for the 91-day T-bills, as planned, with total tenders for this maturity reaching P23.17 billion. The three-month T-bills were sold at an average rate of 5.605 percent, consistent with the rate from last week’s auction.

Similarly, for the 182-day securities, the government raised P6.5 billion with bids for this tenor totaling P14.615 billion. In contrast to last week’s further decrease, the average rate for the six-month T-bill slightly increased to 5.752 percent from 5.735 percent.

Lastly, the Treasury borrowed the planned P7 billion through the 364-day debt instruments, with demand for this maturity reaching P21.65 billion. Like last week, the average rate for the one-year T-bill rose by 0.4 basis points, from 5.786 percent in the previous auction to 5.790 percent.

Prior to the auction, the PHP Bloomberg Valuation (PHP BVAL) Reference Rates indicated that the 91-, 182-, and 364-day T-bills were quoted at 5.508 percent, 5.765 percent, and 5.737 percent, respectively. In contrast to last week’s trends, the average rates for the three-month and one-year T-bills fell below the BVAL rates, while the six-month average rose above it by 6.4 basis points.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), the rise in yields is partly due to concerns that a Trump presidency in the U.S. could result in fewer Federal Reserve rate cuts, stemming from potential protectionist policies that might lead to higher import tariffs due to trade wars. Additionally, rising wage inflation linked to stricter immigration rules could push U.S. inflation higher.

Ricafort also noted that increasing U.S. budget deficits are driving up Treasury yields, with the 10-year yield reaching a four-month high of 4.30 percent, while the peso weakened to 58.60 against the dollar. Despite these developments, the Philippine debt-to-GDP ratio increased to 61.3 percent, although expectations of a U.S. Federal Reserve rate cut could provide some relief, he stated.