T-bill yields rise on US Fed hike jitters

The Bureau of the Treasury (BTr) on Monday awarded only a total of P13 billion in T-bills, out of the P20 billion offered, at rates that rose across the board amid expectations of a US Fed rate hike within the year.

For the 91-day Treasury bills, only P6 billion was accepted out of the P8-billion offering even as the tenders reached P8.725 billion. The average rate for the three-month debt paper increased by 39.4 basis points to 2.049 percent.

Of the P8-billion, 182-day T-bills, only P5 billion was awarded out of the P8.75 billion in tenders. For the six-month IOUs, the average rate jumped by 33.4 basis points to 2.252 percent.

The auction for 364-day Treasury bills, meanwhile, was undersubscribed, as only P3.67 billion was tendered for the P6 billion offered. The BTr nonetheless accepted P2 billion in bids at an average rate of 2.431 percent, up 43.1 basis points from the previous auction.

“The [auction] committee accepted just enough offers to allow secondary rates to align with inflation and Fed rate hike expectations without harming the government’s interest cost targets,” the BTr said in a statement.

The Bangko Sentral ng Pilipinas (BSP) had said that inflation last April could have settled between 1.9 and 2.8 percent.

Investors had also been cautioned to expect more volatility in the financial markets in the coming months after the US Federal Reserve issued dovish statements last week, which seemed to rule out a rate hike previously expected this coming June.

“During this time, when data seem to suggest that the Fed has room to delay action, we can expect some volatility,” BSP Governor Amando M. Tetangco Jr. said last   week.

The BTr will borrow a total of P135 billion through the sale of Treasury bills and bonds locally from April to June.