Yields on gov’t debt mixed as BSP chief turns hawkish

YIELDS on government securities (GS) were mixed last week after the Bangko Sentral ng Pilipinas (BSP) signaled it could start unwinding its pandemicdriven easy policy as early as June.

Bond yields, which move opposite to prices, fell by 2.84 basis points (bps) on average week on week, based on PHP Bloomberg Valuation Service Reference Rates as of April 29 published on the Philippine Dealing

System’s website.

Yields on the

91-, 182- and 364day Treasury bills (T-bills) went up by 0.35 bp, 3.38 bps and 1.63 bps on Friday from their April 22 finish to 1.2501% and 1.5600%, and 1.9332%, respectively.

Meanwhile, rates at the belly of the curve fell as the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) dropped by 7.75 bps (to 3.4336%), 14.73 bps (4.15%), 12.44 bps (4.776%), 9.4 bps (5.2606%), and 20.79 bps (5.7214%), respectively.

On the other hand, the long end of the curve saw mixed movements as the 20- and 25-year debt papers rose by 24.82 bps and 14.03 bps to yield 6.0548% and 6.0471%, respectively, while the rate of 10year bond fell by 10.35 bps to 5.9705%.

Analysts and traders said the slight drop in last week’s GS yields was primarily due to hawkish comments from the BSP chief.

“GS yields fell minimally over the week due to mixed signals from prospects of a potential BSP policy rate hike in June 2022 and increasing global growth concerns mainly from the ongoing Russia-Ukraine conflict and the waning economic activity in China from its aggressive counter-COVID measures,” a bond trader said in an e-mail.

“Market participants remained broadly cautious over the week as expectations of aggressive hawkish policy actions by central banks appears to be limited by the waning post-pandemic global growth from geopolitical tensions and inflationary worries,” the trader said.