Treasury bill yields climbed across all maturities at Monday’s auction as investors priced in the Bangko Sentral ng Pilipinas’ recent rate hike and the prospect of further monetary tightening amid an elevated inflation outlook.
The increase was most pronounced in the six-month tenor, with the average rate on 182-day T-bills rising to 5.781 percent from 5.622 percent a week earlier.
The average rate on 91-day T-bills rose to 5.348 percent from 5.214 percent, while the rate on 364-day paper increased to 5.922 percent from 5.807 percent.
Despite the higher yields, investor demand remained strong. Total tenders reached P71.3 billion, or 1.7 times the P42 billion offered by the Bureau of the Treasury. That was up sharply from the P60 billion in bids received at the previous auction.
The yield increases came after the BSP raised its policy rate, while markets also looked ahead to the US Federal Reserve’s policy meeting this week for signals on the direction of US interest rates. The FOMC will annouce its interest rate decision on Wednesday.
Higher local and global rates can raise the return investors demand from government debt, particularly at the longer end of the T-bill curve, as markets reassess the path of monetary policy.
The strong bidding, however, suggests investors remain willing to put money into short-term government securities even as yields adjust higher.
