Government short-term yields move sideways
Short-term benchmark rates moved sideways at the Bureau of the Treasury’s auction on Monday, Aug. 19, following the central bank’s reduction of policy rates by 25 basis points.
The national government raised P22.6 billion through the sale of Treasury bills (T-bills), exceeding the initial offer of P20 billion. The total bids received amounted to P61.297 billion.
Accredited government securities dealers demanded lower rates for the 182-day and 364-day tenors, resulting in a reduction in rates from the last week’s auction.
The six-month paper was quoted at an average rate of 5.989 percent, below the 6.093 percent in the previous auction last week.
The Treasury made a full P6.5-billion award of the 182-day Treasury bills (T-bills) as tenders for the tenor reached P15.003 billion.
The one-year T-bills’ average rate decreased to 6.023 percent, lower than the previous auction’s 6.062 percent. Tenders submitted for the debt paper stood at P24.420 billion, at least three times the P7-billion offer that was fully awarded.
As for the 91-day debt papers, it was quoted at an average rate of 5.940 percent, above the 5.900 percent in the previous auction last week.
The government also raised the programmed P6.5 billion for the three-month short-term loans. Tenders for the security amounted to P15.003 billion.
According to the Treasury's data based on PHP Bloomberg Valuation Reference Rates, the 91-day, 182-day, and 364-day T-bills were quoted at 5.950 percent, 6.115 percent, and 6.149 percent, respectively, in the secondary market prior to Monday's auction.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the decrease in yields may also be attributed to the latest signals of another 0.25 rate cut in the fourth quarter and the possible Fed rate cut by September.
The Bangko Sentral ng Pilipinas' (BSP) decision to cut policy rates came after the economy expanded by 6.3 percent last quarter, beating market expectations and settling well within the government’s 6 to 7 percent target for the year.
The country’s growth rate outpaced Indonesia’s 5.05 percent, China’s 4.7 percent, and Malaysia’s 5.8 percent. It only fell behind Vietnam’s 6.9 percent.
Meanwhile, inflation in July surged to a nine-month high of 4.4 percent, the first time that inflation breached the BSP's two to four percent target range for the year.