Treasuries and bond rates to rise on Fed, BSP tightening bets
YIELDS on government securities on offer this week are expected to rise further in anticipation of rate hikes by the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP).
The Bureau of the Treasury (BTr) will offer 15 billion pesos in treasury bonds (treasury bills) on Monday, or 5 billion pesos each in 91, 182 and 364-day securities.
On Tuesday it will be auctioned off 35 billion pesos in new three-year Treasury bonds (T-bonds).
A bond trader said in a Viber message that treasury bill rates are expected to move sideways from the previous auction, while the three-year bond could hit a rate ranging from 4% to 4.250%.
“Market participants are still cautious heading into the week in anticipation of further interest rate hikes by the US Fed and BSP,” the trader added.
“Additionally, the market will also be watching this Tuesday’s domestic CPI (consumer price index) print for a lead.”
The BSP chief said the central bank plans to end its accommodative policy related to the pandemic by the second half of the year. BSP Governor Benjamin E. Diokno signaled last week that the policy rate could reach 2.75% by next year.
The central bank kept its key rate unchanged for the 11and back-to-back meeting last month despite warning that its inflation target could be exceeded this year due to soaring global oil prices sparked by Russia’s invasion of Ukraine.
Analysts said headline inflation likely accelerated in March as soaring global oil prices amid the Russian-Ukrainian war caused food and transport costs to rise faster.
A Business world poll of 18 analysts gave a median estimate of 4% for the last month inflation, closer to the upper end of the central bank’s 3.3% to 4.1% projection.
If realized, it would be faster than February’s 3% and would be on the upper bound of the BSP’s 2-4% target. It would still be slower than the 4.5% observed a year earlier.
The Philippine Statistics Authority will release in Marchflration data on Tuesday.
Central banks around the world have tightened monetary policies to temperfleven in the face of risks to economic growth.
The Fed raised its key rates for the Iffirst time since 2018 by 25 basis points (bps) last month to combat its surgeflation which reached its highest level in 40 years. He also signaled more aggressive hikes in future meetings.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the rise in government debt rates could be tempered by lower yields from the Term Deposit Facility (TDF) auctions. ) BSP over the past two weeks, lower global oil prices, and a stronger peso.
Global oil prices fell on Friday ahead of a meeting of member nations of the International Energy Agency to discuss a release of emergency oil reserves alongside the United States’ planned release of a maximum of 1 million barrels of oil per day for six months, Reuters reported.
Brent crude futures fell 6 cents or 0.1% to $104.65 a barrel at 10:55 GMT on April 1. U.S. West Texas Intermediate crude futures were down 37 cents or 0.4% at $99.91.
In the secondary market on Friday, 91-day, 182-day and 364-day Treasury bills were quoted at 1.3493%, 1.5347% and 1.7434%, respectively, based on PHP Bloomberg valuation benchmark rates. published on the Philippine Dealing System website.
The government has partially allocated the treasury bills it offered last week as yields continued to rise amid expectations of more aggressive rate hikes from the Fed.
The BTr allotted just 5 billion pesos in 91-day treasury bills at its auction last week, even as total tenders reached 35.804 billion pesos, more than twice as much than the program of 15 billion pesos.
The government raised 5 billion pesos as planned via the 91-day securities while offers reached 17.802 billion pesos. The average tenor rate rose 5.1 basis points to 1.587% from 1.536% last week.
Meanwhile, the government failed to allocate 182-day treasury bills even as tenders reached 9.4 billion pesos from the 5 billion peso program. Had the government granted a full allocation, the average six-month paper rate would have risen 24.9 basis points to 1.856% from the 1.607% at the previous auction.
The government also rejected 8.602 billion peso offers for the 364-day debt against the 5 billion peso plan. Had BTr fully agreed to its offer, the average one-year Treasury bill rate would have risen 37.5 basis points to 2.137%, from the previously quoted 1.792% for the duration.
Meanwhile, the last time the government offered three-year bonds was on March 1, when it rejected all offers as investors demanded higher yields amid rising prices.flrations due to the Russian-Ukrainian crisis.
BTr plans to raise 200 billion pesos domestically this month, or 60 billion pesos through treasury bills and 140 billion pesos from treasury bonds.
The government borrows from local and external sources to help finance a budget ofIfcit capped at 7.7% of gross domestic product this year. — T. J. Tomas with Reuters