The government has fully paid the treasury bill (T-bill)ffThe ered on Monday eroded rates amid strong demand for short-term loan documents and expectations of aggressive rate hikes from the central bank.FConnection risk
The Bureau of the Treasury (BTr) raised P15 billion as planned through T-bills in its auction on Monday as total bids reached P54.12 billion, nearly four times more than the program but less than the P71.25 billion seen in last week’s auction.
Broken, BTr collected P5 billion as planned through 91-day instruments as the bid reached P26.23 billion. The three-month T-bill average rate rose 1.25% from 1.223% last week to 2.1 basis points (bps).
The government has also awarded the entire P5-billion as 182-day securitiesffer has attracted P15.85 billion in bids. Tenor’s average ten-month rate rose 1.53% from 1.555% in the previous auction to 1.3 bps.
Finally, the Treasury has raised P5.9 billion as a program from 364-day loan papers from P11.954 billion in tenders. The average one-year paper rate rose 2 bps to 1.877% from 1.857% a week ago.
In the secondary market prior to the auction, 91-, 182-, and 364-day bills received rates of 1.2659%, 1.5051%, and 1.7997%, respectively, based on PHP Bloomberg Valuation reference rates published on the Philippine Systems website. .
National Treasurer Rosalia V. De Leon told reporters in a Viber message that BTR had given him the full reward of his T-billffBecause of the aggressive tightening of the US Federal Reserve, there was a strong demand for small tanners.
“The market [was] With short-term biased, consolidated policy rate hikes and expected aggressive Fed action including balance sheet runoffAs againFFed elected in minutes, ”he said.
A trader said via Viber that demand was skewed towards the smaller tenor “due to growing concerns over inflation and the global central bank’s financial austerity.”
“We have entered a cycle of financial constriction not only off the coast but also globally – therefore, investors are still expecting interest rates to rise,” the trader said.
“Although central banks need to increase their rates to control inflation, short-term bonds will continue to be the preferred choice of market outlets,” the trader added.
Central banks around the world are tightening their monetary policy to control inflation despite prolonged risks to economic growth.
A Reuters poll last week found that analysts expect the Fed to raise rates by 50 bps in response to fugitive inflation for its May and June reviews. These analysts also expect a 40% chance of a recession by 2023.
US inflation rose to 8.5% year-on-year in March, the biggest gain in four decades but still in line with market expectations, amid record high fuel costs.
The minutes of the Fed’s March meeting, where the central bank raised borrowing costs from almost zero for the first time since 2018, also plan to raise rates several times this year and cut their asset holdings.
M The direct meeting last month, however, warned that it could start unwinding its epidemic-driven policy due to the risk of inflation. BSP Governor Benjamin E. Diocono had previously said that the policy rate could rise from the current 2% to 2.75% by next year, which is a record low.
Headline inflation was 4% in March, which coincides with the upper end of the central bank’s 2-4% target. It was faster than 3% in February, showing the impact of rising oil prices due to the Russia-Ukraine war.
Meanwhile, a second trader in a Viber message said the auction results came out as expected, adding that “the demand probably came from a fixed T-bill maturity.”
The second trader added that yields have moved away from last week’s auction because the market is still waiting for a “major catalyst”.
On Tuesday, BTr is auctioning off P35 billion reissued seven-year Treasury bonds (T-bonds) with six years and three months left.
The first trader said demand for the bond offer may be muted compared to Monday’s T-bill auction as investors continue to prefer a smaller tug of war between the Fed and BSP rate hikes and fears of rising inflation.
BTr wants to raise P200 billion from the domestic market in April or P60 billion through T-bills and P140 billion through T-bonds.
The government borrows from local and foreign sources to help finance a budgetfiCT is limited to 7.7% of GDP this year. – TJ Thomas With Reuters