Expectations of further easing by the Bangko Sentral ng Pilipinas are rippling through the debt market, pushing treasury bill yields lower and fueling strong demand at the latest auction.
On Monday, the Bureau of the Treasury comfortably borrowed more than planned after investors piled into short-term government securities, betting that the BSP will cut policy rates again in the coming months. Total bids reached P158.2 billion—nearly six times the P27 billion on offer—giving the government room to upsize its borrowing to P37.8 billion at a lower cost.
The yield on the 91-day treasury bill slipped to a range of 4.492 percent to 4.579 percent last week. Rates on the 182-day paper eased to 4.578 percent from 4.672 percent previously, while the average yield on the 364-day bill declined to 4.615 percent from 4.689 percent. All average auction rates settled below prevailing levels in the secondary market, signaling investors’ willingness to lock in returns ahead of anticipated policy easing.
The rally reflects growing confidence that inflation will remain manageable, giving the BSP room to support an economy that has yet to regain momentum. Most market watchers expect at least one more rate cut this year as monetary authorities seek to stimulate credit growth and spending without reigniting price pressures.
The central bank is scheduled to hold its next policy meeting on February 19, a date now firmly on investors’ radar. Until then, demand for short-dated government securities is likely to stay firm, with bidders positioning early for lower benchmark rates.
