Treasury bill yields continued to ease at Monday’s auction, with the rate on the benchmark 91-day paper slipping below 5 percent as cooling inflation strengthened expectations for a more accommodative monetary policy.
Strong investor demand gave the Bureau of the Treasury room to raise P58.8 billion, near the upper end of its P42-billion to P60-billion target range for the week.
Total tenders surged to P184.23 billion from P167.7 billion a week earlier, signaling that investors remain keen to lock in yields even as rates gradually move lower.
The average yield on the 91-day Treasury bill fell to 4.995 percent from 5.037 percent last week. The 182-day rate declined to 5.545 percent from 5.652 percent, while the 364-day paper softened to 5.723 percent from 5.912 percent.
The across-the-board decline comes as inflation shows signs of losing momentum. Consumer price growth eased to 6.2 percent in July from 6.4 percent in June and this year’s peak of 7.2 percent in April, when higher oil prices amplified price pressures amid geopolitical tensions in the Middle East.
For bond investors, the improving inflation trend strengthens the case for lower policy rates, although the path remains dependent on how quickly price pressures normalize and how external risks evolve.
The Bangko Sentral ng Pilipinas’ next monetary policy meeting later this month will therefore be closely watched. A softer inflation backdrop gives the central bank greater room to consider easing, which could further support demand for government securities.
For now, the auction suggests investors are already positioning for that possibility. Falling yields, however, also mean the government’s borrowing costs are gradually declining, a welcome development as it continues to tap domestic markets to finance its spending and investment program.
