Yields on government debt mostly flat
YIELDS on government securities (GS) ended mostly flat last week amid the release of US inflation data that tempered bets of an early rate cut by the US Federal Reserve.
GS yields, which move opposite to prices, went down by an average of 3.77 basis points (bps) week on week at the secondary market, based on the PHP Bloomberg Valuation Service Reference Rates as of March 15 published on the Philippine Dealing System’s website.
The short end of the curve ended mixed, as yields on the 182-, and 364-day Treasury bills (T-bills) declined by 1.68 bps (to 5.9578%) and 8.54 bps (6.0195%), respectively. Meanwhile, the rate of the 91-day T-bill inched up by 0.77 bp (5.7729%)
At the belly, the rates of the two-, three-, four-, five-, and seven-year Treasury bonds (Tbonds) dropped by 8.82 bps (to 6.0257%), 8.8 bps (6.0732%), 8.13 bps (6.1227%), 7 bps (6.166%), and 5.09 bps (6.2123%), respectively.
Meanwhile, yields on the 20and 25-year debt papers increased by 4.46 bps (to 6.3001%) and 4.71 bps (6.2948%), respectively, while the 10-year debt paper fell by 3.39 bps to fetch 6.2189%.
Total GS volume reached P19 billion on Friday, higher than the P14.13 billion seen on March 8.
A bond trader said in a Viber message that US consumer inflation data affected local yields last week, as these could be considered by the Fed in its meeting this week.
US consumer prices increased solidly in February amid higher costs for gasoline and shelter, suggesting some stickiness in inflation that could delay an anticipated June interest rate cut from the Federal Reserve, Reuters reported.
The consumer price index (CPI) rose 0.4% last month after climbing 0.3% in January, the Labor department’s Bureau of Labor Statistics said on Tuesday. Gasoline and shelter, which includes rents, contributed more than 60% to the monthly increase in the CPI. In the 12 months through February, the CPI increased 3.2%, after advancing 3.1% in January.
Economists polled by Reuters had forecast the CPI gaining 0.4% on the month and increasing 3.1% year on year. The annual increase in consumer prices has slowed from a peak of 9.1% in June 2022, but progress has stalled in recent months. —
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