Rates of T-bills, bonds may climb after US data
RATES of the Treasury bills (Tbills) and Treasury bonds (Tbonds) on offer this week could track the rise in secondary market yields following the latest US inflation data and US Federal Reserve rate cut bets.
The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, or P5 billion each in 91-, 182- and 364-day papers.
On Tuesday, it will offer P30 billion in fresh seven-year T-bonds.
T-bill and T-bond rates may track the increases seen in secondary market yields, which came amid volatility in the pesodollar exchange rate, high global crude oil prices and geopolitical tensions in the Middle East, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
At the secondary market on Friday, rates of the 91-, 182-, and 364day T-bills went up by 11.05 basis points (bps), 8.72 bps, and 14.6 bps week on week to end at 5.337%, 5.5956%, and 5.9734% respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.
The yield on the seven-year bond also rose by 8.47 bps week on week to end at 6.1662% on Friday.
On Friday, the peso closed at P55.911 against the dollar, strengthening by 3.9 centavos from its P55.95 close on Thursday, data from the Bankers Association of the Philippines’ website showed.
Week on week, however, the local unit weakened by 21.1 centavos from its P55.70 close on Jan. 5.
Meanwhile, Brent crude futures rose 88 cents, or 1.1%, to settle at $78.29 a barrel. The session high was more than $80, the highest this year so far. US West Texas Intermediate crude futures climbed 66 cents, or 0.9%, to settle at $72.68, paring gains after touching a 2024 high of $75.25, Reuters reported.
On the other hand, a trader expects the seven-year bonds on offer this week to fetch a coupon rate of 6.25%.
“Ultimately, the seven-year Dutch auction [this] week will be highly anticipated as it could actually fetch a coupon rate of 6.25%, forcing the yield curve to adjust,” a trader said in an e-mail.
T-bill and T-bond rates could climb amid recent US inflation data, which could support the possibility of a rate cut by the Fed as early as March, Mr. Ricafort added.
US consumer prices increased more than expected in December, with Americans paying more for shelter and healthcare, suggesting it was probably too early for the Federal Reserve to start cutting interest rates, Reuters reported.
The consumer price index (CPI) rose 0.3% last month after nudging up 0.1% in November, the Labor department’s Bureau of Labor Statistics said.
In the 12 months through December, the CPI rose 3.4% after increasing 3.1% in November.
Inflation averaged 4.1% in 2023, down from 8% in 2022.
Financial markets still see more than a 60% chance of a rate cut at the Fed’s March 19-20 policy meeting, according to CME Group’s FedWatch Tool. The Fed has hiked its policy rate by 525 bps to the current 5.25%-5.5% range since March 2022.