Further short-term rate declines seen

As for the RRR cut, the analyst expects “at least 100 basis points,” that will then inject significantly more liquidity in the fiscal system

The Bureau of the Treasury (BTr) anticipate Treasury bill (T-bill) rates to ease further amid expectations of another round of policy rate cuts and the banks’ reserve requirement ratio (RRR).

This was bared on Friday by Rizal Commercial Banking Corp. lead economist Michael Ricafort who noted factors seen prompting further declines in T-bill rates.

“Treasury bill yields could continue to ease amid expectations of another 0.25 percent cut in policy rates and possible cut in RRR of banks as early as September 2019,” Ricafort said in a text message.

According to him, sustained declines in inflation over the near-term help boost the likelihood of more favorable T-bill rates.

External factors such as lower global interest rates and inflation amid slower global economic outlook, the inversion of yield curve attributed to the US-China trade war, weaker Chinese yuan and Brexit-related uncertainties all help influence prospectively lower T-bill rates.

As for the RRR cut, the analyst expects “at least 100 basis points,” that will then inject significantly more liquidity in the fiscal system.

Ricafort also said the local unit the peso should trade within a fairly narrow band over the next five trading days.

“The peso could range P52.20 to P52.70 in the coming week amid volatility in the global financial markets amid concerns over global economic growth/outlook,” he said.

Earlier, T-bill rates across all tenors moved south since the second quarter owing to the sustained easing in price pressures.

The yield for the 91-, 182- and 364-day benchmarks averaged 5.204 percent, 5.552 percent and 5.627 percent, respectively, in the April to June 2019 period.

This compares to the same averaging 5.584 percent, 6 percent and 6.098 percent in first three months this year.