T-bill rates up, but more stable vs bonds amid inflation woes

The Bureau of the Treasury (BTR) on Monday raised P15 billion from short-dated T-bills even as bid rates for two tenors inched up on jitters over high inflation and looming US Fed tapering.

The Treasury sold P5 billion each in the benchmark 91-, 182- and 364-day IOUs. The average rate for the three-month debt paper rose to 1.095 percent from 1.085 percent last week, while the annual yield for the one-year increased to 1.587 percent from 1.584 percent previously.

The six-month securities were awarded at 1.391 percent, the same rate as last week’s auction.

While rates of multiyear bonds climbed faster during recent auctions, the shorter treasury bills fetched relatively more stable yields.

“[There were] higher rates for bonds, given expectations of the US Federal Reserve’s unwinding of an accommodative monetary stance starting with bond purchases and eventual [interest] rate lift-off. Locally, the market expects high inflation to be temporary starting with slower inflation in September,” National Treasurer Rosalia de Leon said.

The rate of increase in prices of basic commodities last month slightly eased to 4.8 percent, although the end-September average of 4.5 percent remained above the Bangko Sentral ng Pilipinas’ 2-4 percent target range.

But in a report last week, London-based Capital Economics said headline inflation rates across Asia were “likely to rise further in October due to the jump in energy prices, with the price of coal and gas now at record highs, and Brent crude at its highest level since 2018.”

Capital Economics nonetheless expected energy prices would “start to ease soon, as supply and demand adjust” following the pandemic-induced consumption slump last year when countries closed borders to contain COVID-19, hurting global travel and trade.

Monday’s T-bill auction attracted a total of P46.59 billion in bids, making it thrice oversubscribed. INQ