Yields on Treasury bills (T-bills) increased for the second consecutive week on Monday, tracking the upswing in US Treasury bond rates as investors tempered dovish bets on the US Federal Reserve.
The Bureau of the Treasury was able to borrow its target amount of P20 billion as the total bids reached P51.7 billion, exceeding the original size of issuance by 2.6 times.
Auction results showed that the 91-day T-bill averaged 5.444 percent, much higher than the 5.414 percent in the previous auction.
Creditors also asked for higher rates on the 182- and 364-day debt paper, which averaged 5.668 percent and 5.623 percent versus last week’s 5.474 percent and 5.540 percent, respectively.
“T-bill yields were a touch higher, taking cue from secondary Treasury bond (T-bonds) yields trading in the morning session. Local bonds continue to monitor US bond movements for direction amid lack of fresh local catalysts,” Dino Angelo Aquino, vice president and head of fixed income of Security Bank Corp., told the Inquirer.
At the secondary market, yield on 10-year T-bonds rose to 5.76 percent from 5.725 percent last Friday. Meanwhile, the yield on five-year debt note also increased to 5.66 percent from 5.64 percent.
Rising US Treasury yields
Aquino noted that US yields have continued to rise, driven by inflation concerns, with the 10-year Treasury now reaching a two-month high of 4.1 percent.
US inflation rose to 2.4 percent in September amid higher food costs, marking the smallest year-on-year increase since February 2021.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that yields on T-bills rose as the market was less optimistic about the US Federal Reserve cutting interest rates this year.
Ricafort said that traders are now less dovish, pricing in a lower probability of policy rate cuts for the year.
The government plans to raise P145 billion from the domestic market in October, of which P100 billion will come from T-bills and P45 billion from T-bonds.