Average rates on Treasury bills climbed at Monday’s auction as investors demanded higher returns, adjusting to expectations of further monetary tightening by the Bangko Sentral ng Pilipinas amid rising inflation pressures.
The central bank signaled that April inflation, due for release Tuesday, could accelerate sharply to between 5.6 percent and 6.4 percent from 4.1 percent in March, largely driven by higher fuel costs. The outlook has reinforced expectations that interest rates may stay elevated or rise further in the near term.
Against this backdrop, demand for government securities softened. Total tenders fell to P44.3 billion from P73.5 billion in the previous auction, as dealers priced in higher yields before committing funds. The Bureau of the Treasury partially rejected bids, awarding only P28.01 billion out of the P31 billion on offer, signaling resistance to locking in higher borrowing costs too quickly.
Despite the rejections, yields moved higher across all tenors. The 91-day Treasury bill rose to 4.711 percent from 4.558 percent, while the 182-day paper climbed to 4.964 percent from 4.737 percent. The 364-day bill posted the largest increase, reaching 5.377 percent from 5.184 percent previously.
The upward shift reflects a market recalibrating to inflation risks and tighter liquidity conditions. Investors are increasingly demanding compensation for uncertainty around price stability, while the government is balancing funding needs against rising borrowing costs.
With inflation data imminent, volatility in short-term rates is expected to persist, as both policymakers and markets weigh the pace and extent of further tightening.
