T-bill rates continue ascent

Yields on Treasury bills (T-bills) rose for the fourth straight week on Monday due to uncertainties over the US presidential elections and prospects of a less aggressive monetary easing by the US Federal Reserve.

Auction results showed that the three-month T-bill fetched an average yield of 5.586 percent, more expensive than the 5.463 percent in the previous auction. The rate for the 182-day paper also went up to 5.752 percent, from 5.731 percent.

Likewise, the rate for the 364-day debt note went up by 5.751 percent from 5.686 percent last week.

Despite the higher rates, the Bureau of the Treasury borrowed its target amount of P20 billion with total bids reaching P56 billion, exceeding the original offer size by 2.8 times.

The government aims to raise P145 billion from the domestic market this month of which P100 billion will come from T-bills and P45 billion from Treasury bonds.

Strong dollar

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that T-bill rates were higher as the US dollar strengthened against the local currency, which could lead to increased import costs and overall inflation.

The local currency ended last week above the 58-level due to election uncertainties boosting the greenback, which is also supported by expectations of slower interest rate cuts by the US Federal Reserve.

Additionally, the markets are responding to a potential Donald Trump victory in the upcoming elections, which has boosted the dollar against other major currencies, including the yen.

Cautious signals

“These [uncertainties] partly led to more cautious signals on future Fed rate cuts from some Fed officials,” he told the Inquirer.

The US central bank’s benchmark rate now ranges from 4.75 to 5 percent following a 50-basis-point cut last month, given cooling inflation and labor markets.