Average yields on Treasury bills declined at Monday’s auction, as strong demand for short-term government debt reflected expectations of at least one more policy rate cut this year.
Total tenders reached P126.6 billion—nearly five times the P27 billion on offer—allowing the Bureau of the Treasury to more than fully award the auction and raise the issue size to P37.8 billion. The robust demand enabled the government to meet its funding needs at lower borrowing costs.
The yield on the 91-day Treasury bill eased to 4.723 percent from 4.731 percent in the previous auction. Rates on the 182-day paper also fell, settling at 4.817 percent from 4.850 percent last week.
Likewise, the average yield on the 364-day Treasury bill slipped to 4.888 percent from 4.916 percent.
Investor appetite for short-dated securities remains strong as market participants continue to price in further monetary easing by the Bangko Sentral ng Pilipinas (BSP). Inflation remains benign, while economic growth has come in weaker than expected, reinforcing expectations that the central bank still has room to cut rates.
With policy uncertainty easing and liquidity remaining ample, traders said demand for government securities is likely to stay elevated in the near term, keeping yields on the defensive even as the Treasury adjusts its borrowing strategy.
