Treasury bill yields ended mixed on Monday as investors weighed the impact of fresh government debt supply against easing inflation concerns following a breakthrough peace agreement in the Middle East that triggered a sharp decline in global oil prices.
The Bureau of the Treasury raised P89.6 billion from the market, nearly matching its combined P90-billion offering of Treasury bills and cash management bills (CMBs). Demand remained firm despite expectations that the Bangko Sentral ng Pilipinas (BSP) could tighten monetary policy further at its policy meeting on Thursday.
Market sentiment received a boost after news that the US and Iran had reached an agreement to reopen the Strait of Hormuz, sending crude oil prices sharply lower. The development eased concerns over inflationary pressures linked to fuel, transport and production costs, helping temper yields on some shorter-dated government securities.
The Treasury partially awarded the 63-day CMB, raising P19.6 billion after capping accepted bids to keep borrowing costs in check. The 35-day CMB fetched an average yield of 4.611 percent, while the 63-day paper settled at 4.942 percent.
Among benchmark Treasury bills, the 91-day tenor saw its average yield ease to 5.171 percent from 5.188 percent previously, reflecting improved near-term inflation expectations. The 364-day bill also rallied, with its average rate falling to 6.142 percent from 6.267 percent.
In contrast, the 182-day Treasury bill bucked the trend, with its yield inching up to 5.694 percent from 5.679 percent, suggesting investors remain cautious about the interest-rate outlook over the medium term.
The mixed results underscore the tug-of-war between easing inflation risks and expectations of tighter monetary policy. While lower oil prices could help moderate inflation in the coming months, investors remain wary that the BSP may still opt for another rate hike after inflation accelerated in recent months.
Thursday’s policy meeting is expected to provide clearer guidance on whether the central bank sees the recent drop in oil prices as sufficient to offset broader inflationary pressures.
