RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may end mixed to mirror secondary market yield movements amid global trade war concerns, expectations of fresh supply of debt papers, and dovish signals from the Bangko Sentral ng Pilipinas (BSP).
The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday or P8 billion each in 91- and 182-day papers and P9 billion in 364-day papers.
On Tuesday, the government will hold its price-setting auction for an offering of new 10-year fixed-rate Treasury notes (FXTN), from which it wants to raise at least P30 billion. The offer period is scheduled to run until April 24, unless closed earlier.
The BTr has canceled the auction of 15-year bonds scheduled for April 22 to make way for the FXTN offering.
Yields on the T-bills and bonds may track the mixed rate movements at the secondary market last week, which came amid broad volatility due to overseas and domestic developments, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
T-bill auction yields this week may be little changed or slightly lower following the BSP’s latest rate cut and signals of further monetary easing amid an improving inflation outlook, he said.
Meanwhile, the 10-year bonds could fetch rates in line with secondary market levels to track the rise in US Treasuries due to the shifting trade policies of the United States and fears of a global trade war, Mr. Ricafort added.
“Yields on government securities (GS) shot up by as much as 20 basis points (bps) as stops were triggered following rising uncertainties globally. Moreover, [this] week’s 10-year jumbo FXTN auction repriced the local curve higher. The coupon rate is now expected to be either 6.375% or 6.5%,” a trader said in an e-mail.
At the secondary market on Friday, rates of the 91- and 364-day T-bills rose by 2.47 bps and 0.69 bp week on week to end at 5.3701%, and 5.7804%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of April 11 published on the Philippine Dealing System’s website. On the other hand, the 182-day paper went down by 6.39 bps to yield at 5.618%
Meanwhile, the 10-year bond saw its yield rise by 15.57 bps week on week to close at 6.2576%.
The BSP on Thursday cut benchmark interest rates by 25 bps to bring the policy rate to 5.5%, as expected by all 17 analysts in a BusinessWorld poll, putting its easing cycle back on track after an unexpected pause in February amid uncertainties stemming from the policies of US President Donald J. Trump.
BSP Governor Eli M. Remolona, Jr. said expectations of easing inflation support the shift to a more accommodative monetary policy stance, adding that the Monetary Board is considering further rate cuts this year in “baby steps” of 25 bps at a time.
The Philippine central bank has now reduced borrowing costs by a cumulative 100 bps since it kicked off its easing cycle in August last year.
Meanwhile, Beijing increased its tariffs on US imports to 125% on Friday, hitting back against Mr. Trump’s decision to raise duties on Chinese goods and increasing the stakes in a trade war that threatens to upend global supply chains, Reuters reported.
The retaliation intensified global economic turmoil unleashed by Mr. Trump’s tariffs. US stocks ended a volatile week higher, but the safe haven of gold hit a record high during the session and benchmark US 10-year government bond yields posted their biggest weekly increase since 2001 alongside a slump in the dollar, signaling a lack of confidence in America Inc.
The $29-trillion Treasury market saw an acute sell-off following Mr. Trump’s initial announcement about what he calls reciprocal tariffs. That turbulence was seen as part of what drove Mr. Trump to announce a 90-day pause for countries other than China on Wednesday.
Benchmark 10-year US Treasury yields, which move opposite to price, registered their biggest weekly rise in more than two decades, with trading volumes well above average, amid fears that China may be offloading a large portion of its US bond holdings.
Last week, the BTr raised P24.46 billion from the T-bills it auctioned off, short of the P25-billion plan, even as total bids reached P63.33 billion.
Broken down, the Treasury borrowed just P7.46 billion via the 90-day T-bills, lower than the P8-billion program, even as tenders for the tenor reached P12.96 billion. The three-month paper was quoted at an average rate of 5.393%, rising by 8.6 bps from the previous auction. Tenders accepted by the BTr carried yields of 5.325% to 5.449%.
Meanwhile, the government made a full P8-billion award of the 181-day securities as bids for the paper amounted to P19.03 billion. The average rate of the six-month T-bill was at 5.645%, 0.8 bp lower, with accepted rates ranging from 5.545% to 5.747%.
Lastly, the Treasury raised P9 billion as planned via the 363-day debt papers as demand for the tenor totaled P31.34 billion. The average rate of the one-year debt went down by 2.2 bps to 5.726%, with bids accepted having yields of 5.71% to 5.745%.
Last week’s T-bill tenors were adjusted as the issue date was pushed back due to a holiday. — A.M.C. Sy with Reuters