Yields on gov’t debt track US Treasuries
YIELDS on government securities (GS) rose across the board last week amid higher US rates due to expectations of delayed policy easing by the US Federal Reserve.
GS yields, which move opposite to prices, went up by an average of 4.06 basis points (bps) week on week at the secondary market, based on the PHP Bloomberg Valuation Service Reference Rates as of Feb. 23 published on the Philippine Dealing System’s website.
At the short end, yields on the 91-, 182-, and 164-day Treasury bills (T-bills) went up by 5.22 bps (to 5.6226%), 4.48 bps (5.9045%), and 5.32 bps (6.1323%), respectively.
At the belly, the rates of the two-, three-, four-, five-, and seven-year Treasury bonds (Tbonds) increased by 7.29 bps (to 6.1316%), 4.6 bps (6.1638%), 2.8 bps (6.1946%), 2.51 bps (6.2228%), and 3.77 bps (6.2614%), respectively.
At the long end, the 10-, 20-, and 25-year papers climbed by 0.55 bp, 4.24 bps, and 3.86 bps to yield 6.2634%, 6.3995%, and 6.3994%, respectively.
GS volume traded stood at P17.97 billion on Friday, up from P4.24 billion on Feb. 16.
Local GS rates rose to track the increase in US Treasury yields, Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said in an e-mail.
“Local bond markets continue to take their cue from developments in the US Treasury market. With the Fed signaling it won’t be cutting rates soon, accompanied by some robust US economic data, local bonds have tracked their move,” Mr. Mapa said.
“Movement was mainly influenced by mostly elevated global yields following the reaction to higher price data from the US,” a bond trader likewise said in a Viber message.
The benchmark 10-year Treasury yield, which moves inversely to bond prices, hit 4.35% earlier last week, its highest level since late November, Reuters reported.
While optimism on earnings and the economy has helped stocks shrug off the climb in yields, this could change if inflation data keeps coming in stickier than expected, forcing the Fed to further delay rate cuts. —