Yields on Philippine treasury bills (T-bills) were higher at the auction Monday as the market worries over further acceleration in inflation could force the Bangko Sentral ng Pilipinas to resume its aggressive tightening of monetary policy.
The BSP has projected September inflation—data due for release on Thursday–to settle within the range of 5.3 percent to 6.1 percent after accelerating to 5.3 percent in August. The central bank, which paused in May after a series of hikes that total 4.25 percentage points, said it may resume interest rates increases if inflation continues to rise.
Yield on the 91-day treasury bills rose to 5.698 percent from 5.595 percent at last week’s auction, moving closely towards the BSP’s overnight rate that now stand at 6.250 percent.
The 181-day bill saw yield rise to 6.023 percent from 5.968 percent last week while yield on the 364-day paper climbed to 6.215 percent from 6.119 percent.
Total tenders for the P15 billion offer nearly doubled to 27.58 billion, with the bulk of the bids focused on the three- and six-month papers, underscoring the market’s growing concern in the market over another possible rate hike. The next policy meeting of the central bank is set in early November.
Bids for 91-day treasury bill total P10.01 billion, double the P5 billion offer. The treasury awarded P5.01 billion of three-month paper.
Tenders for the 181-day debt paper reached P9.11 billion but the treasury accepted only P4.11 billion. The offered amount was P5 billion.
Total award for the 364-day bill reached P5.54 billion. Tenders reached P8.46 billion.
