Yields on shorter-dated government IOUs mostly edged higher for the ninth consecutive week, driven by expectations of rising inflation and a strong US dollar.
The Bureau of the Treasury successfully raised P15 billion from its latest Tresury-bill auction that attracted P57.0 billion in tenders, nearly four times the offered amount and exceeding the P47.16 billion recorded in the previous week's auction.
The Treasury fully awarded P5 billion each for the three-month, six-month, and one-year T-bills. The 91-day T-bill saw P21.75 billion in tenders and was quoted at an average rate of 5.630 percent, slightly lower than the previous week's 5.647 percent.
The 182-day T-bill, meanwhile, attracted P16.11 billion in bids and settled at an average rate of 5.905 percent, up from 5.882 percent.
The 364-day T-bill received P19.94 billion in tenders and cleared at an average rate of 5.937 percent, also higher than the previous week's 5.905 percent.
Michael L. Ricafort, Rizal Commercial Banking Corp. chief economist, attributed the upward trend in yields to several factors.
"Treasury bill average auction yields [are] mostly slightly higher for the 9th straight week, ahead of the latest local inflation data that is expected to slightly pick up from 2.3 percent in October 2024," Ricafort said.
He added that the US dollar/peso exchange rate, currently hovering near its record high of 59.00, could further contribute to inflationary pressures by increasing import costs.
Ricafort also noted the potential impact of global events on domestic yields.
“[US President-elect Donald] Trump proposed higher US tariffs on imported goods from Mexico, Canada, and China that could lead to higher US inflation and fewer Fed rate cuts," he said.
This external pressure could influence local monetary policy and affect investor sentiment.
Despite these upward pressures, there are factors that could moderate the rise in yields.
Market expectations of a 0.25 basis point rate cut by the US Federal Reserve on Dec. 18, 2024, and a possible similar move by the local central bank on Dec. 19, as indicated by Bangko Sentral ng Pilipinas Governor Remolona, may help to keep yields in check.