Jitters over high inflation push up T-bill rates

MANILA, Philippines—The Bureau of the Treasury on Tuesday (Nov. 2) raised P15 billion from short-dated T-bills even as rates climbed across-the-board on expectations of persistent elevated inflation in October.

The Treasury awarded all P5 billion each in the benchmark 91-, 182-, and 364-day debt paper it auctioned off.

Three-month IOUs fetched an average rate of 1.13 percent, up from 1.119 percent last week. The yield of six-month securities rose to 1.395 percent from 1.387 percent previously, while the annual rate for the one-year treasury bills jumped to 1.613 percent from 1.606 percent.

National Treasurer Rosalia de Leon noted that the rates rose by only about 1 basis point (bp) or less, while the Treasury said in a statement that the T-bills were sold below secondary market trading levels.

De Leon said investors made their bids while waiting for the October inflation print which will be out on Friday (Nov 5), as well as the anticipated announcement of the US Federal Reserve about when it would go on “tapering” or reduce purchases of assets like bonds to cut back on stimulus amid improving economic prospects in the United States.

Majority of economists polled by the Inquirer last week projected headline inflation in October to be lower than September’s 4.8 percent, although still above the Bangko Sentral ng Pilipinas’ (BSP) 2-4 percent target range of manageable consumer price hikes.

DBS Group Research economist Chua Han Teng said he expects headline inflation to have slightly eased to 4.7 percent in October as “slower food price growth was likely met with upside energy price pressures, with core inflation remaining steady.”

Maybank Investment Bank Berhad economist Zamros Dzulkafli projected a higher 4.9 percent year-on-year rate of increase in prices of basic commodities last October, warning that “elevated global crude oil prices and the recent typhoon ‘Maring’ were expected to keep upward pressure on inflation in the Philippines in the coming months.”

Despite investors’ inflation jitters, Monday’s T-bill auction was almost thrice oversubscribed, with a total of P41.8 billion in bids across the three tenors.

TSB