Investors flocked to shorter-dated government securities on Monday as rising yields and weak appetite for longer tenors reflected expectations of further monetary tightening amid surging inflation and persistent geopolitical uncertainty.
At the Treasury bill auction, the Bureau of the Treasury failed to raise the full P32 billion on offer after weak demand for one-year debt papers dragged overall subscriptions lower, highlighting investor caution over the interest rate outlook.
Half of the total P44.87 billion in bids went to the three-month Treasury bills, allowing the government to fully award the P12 billion offering despite the average yield climbing to 4.85 percent from 4.711 percent in the previous auction.
Demand softened as maturities lengthened. Tenders for the 182-day Treasury bills still exceeded the P10 billion offer, but bids for the 364-day securities reached only P6.51 billion, falling short of the amount on the auction block.
The uneven demand pattern suggests investors are positioning cautiously ahead of possible additional policy tightening by the Bangko Sentral ng Pilipinas.
The central bank on April 23 raised benchmark overnight interest rates by 25 basis points to 4.50 percent in an effort to contain inflationary pressures. The move came shortly before April inflation accelerated to 7.2 percent, the fastest pace in three years and well above the BSP’s target range.
Analysts said investors remain wary that elevated fuel prices, supply-side pressures, and geopolitical tensions could keep inflation high for longer, increasing the likelihood of another rate hike at the BSP’s next policy meeting in mid-June.
The preference for shorter-term securities also reflects expectations that yields may continue rising in the coming months, prompting investors to avoid locking funds into longer-dated instruments at current rates.
