T-bills draw mixed rates
Treasury bill rates were mixed yesterday as investors opted to gobble up short-term papers due to a report showing that hiring in the US slowed sharply in May.
Yields for the 91- day and 182- day papers stood at 1.588 percent and 1.617 percent, respectively. They were down 8.6 and 3.3 basis points from the previous auction.
However, the 364day T-bills fetched a yield of 1.925 percent, up 5.9 basis points from the previous rate.
All issuances we r e oversubscribed. The government awarded P8 billion in 91-day and P6 billion each for six-month and one-year papers.
“(This is due) to economic data coming from the US,” National Treasurer Roberto Tan told reporters after the auction.
The US created an additional 38,000 jobs in May, the least in six years, even as the unemployment rate fell to 4.7 percent during the same month as more people stopped looking for jobs.
Analysts said the jobs report is likely to push the US Fed to hold off raising its key interest rate any time soon.
“We continue to see a lot of demand at the front- end of
the curve. Despite expectations of delay in Fed rate hike, there are domestic concerns,” a bond trader said in a phone interview.
“There are local concerns such as faster inflation and a change in the next government’s fiscal policy,” she added.
The incoming administration has vowed to increase spending and bring the budget deficit to three percent of gross domestic product (GDP).
If realized, the figure will mark the widest deficit in six years and will be up from 0.9 percent last year.
“It’s not really a concern because there is still demand. It’s more of an acknowledgment that there is plan to increase the deficit,” the trader said.
The central bank’s term deposit facility – which offers investors to park smallterm deposits maturing seven and 28 days for interest – will open tomorrow and also affected the results of the auction.
“They will just begin operations on Wednesday and investors want to reassess this new (investment) product since it is just starting,” the trader said.