Wednesday, May 29, 2024

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Bonds and Treasury bill interest rates could potentially increase due to bets on the policy decisions of the BSP (Bangko Sentral ng Pilipinas).


RATES of Treasury bills (T-bills)

There are bonds available for purchase this week.

Investors may anticipate an increase due to the BSP’s potential for more strict measures following a surprisingly quick September in.flation.

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On Monday, a total of P15 billion was invested in T-bills, with P5 billion being allocated to each of the 91-day, 182-day, and 364-day papers.

On Tuesday, there will be a reissue of 10-year Treasury bonds (T-bonds) with a remaining life of five years and three months, amounting to P30 billion.

the speech.

The yields for T-bills and bonds may follow the uptick observed in the secondary market on Friday as a result of the central bank’s hawkish stance expressed in the speech.fl

According to a message sent on Viber by Rizal Commercial Banking Corp.’s Chief Economist Michael L. Ricafort, there was an increase in activity which reached a three-month high in September.

The secondary market experienced an increase in the 91-, 182-, and 364-day T-bills on Friday, with a rise of 0.7 basis point (bp), 2.78 bps, and 4.97 bps week over week, resulting in end rates of 5.7119%, 6.0106%, and 6.2438%, according to data from the Philippine Dealing System’s website.

The 5-year bond increased by 6.68 basis points (bps) compared to last week, reaching a final rate of 6.4113%.

According to a trader’s e-mail, the GS (government securities) market experienced more unraveling as players adjusted their positions due to worries about the BSP’s policy decision in November and early 2024, caused by a resurgence of inflationary pressures.

The trader observes that the interest rate for the five-year T-bond is fluctuating between 6.5% and 6.7%.

Headline infl

The Philippines Statistics Authority released data last week showing that inflation rose to 6.1% in September, its highest level in three months, up from 5.3% in August.

The reported figure for September 2022 was lower than the 6.9% rate, but it fell within the range of BSP’s forecast of 5.3-6.1% for the month.

th straight month of inflation above the central bank’s target

In September, the consumer price index (CPI) was higher than the median estimate of 5.4%, according to a poll conducted by BusinessWorld with 17 analysts. This marks the 18th consecutive month of inflation exceeding the central bank’s target.th consecutive month that infl

The goal of 2-4% for the year was surpassed.

For the fi

Over the first nine months, the Consumer Price Index had an average of 6.6%, which was higher than the central bank’s predicted 5.8% for the entire year.

After the data was released, the BSP stated that it is prepared to resume tightening monetary policy if needed to prevent a further increase in prices.

Last month, the central bank maintained its policy rate at 6.25% for the fourth consecutive meeting. This decision came after increasing borrowing costs by 425 basis points from May 2022 to March 2023.

The next policy meeting of the Monetary Board will take place on November 16. BSP Governor Eli M. Remolona, Jr. has expressed his readiness to consider alternative options.ff

-Increase interest rates in between monthly reviews if there is a rise in inflation risks.

The trader noted that the most recent US job information could potentially impact T-bond rates.

According to Reuters, the US Labor department announced that nonfarm payrolls rose by 336,000 in the previous month. Additionally, the data for August was adjusted upwards to reflect the addition of 227,000 jobs, rather than the initially reported 187,000.

The job numbers for September exceeded expectations, coming in at almost twice the predicted 170,000 according to a Reuters poll of economists. This was unexpected and caused confusion in the market as people tried to figure out how the US Federal Reserve would handle a robust economy while still aiming to lower rates to their 2% target.

Last week, the Bureau of the Treasury only collected P12.916 billion through T-bills, falling short of the P15-billion target, despite receiving bids totaling P27.574 billion.

The Treasury awarded the full amount of P5 billion for the 91-day T-bills, with tenders reaching P10.01 billion. The average rate for the three-month paper increased by 10.3 basis points to 5.698%. Accepted rates varied from 5.68% to 5.725%.

The government successfully obtained P5 billion from the 182-day securities as expected, with a total of P9.106 billion in bids for the tenor. The average interest rate for the six-month T-bill was 6.023%, showing a 5.5 basis point increase from the previous week. Accepted rates ranged from 5.975% to 6.054%.

Despite demand for the 364-day debt papers reaching P8.458 billion, the BTr only borrowed P2.916 billion, falling short of their planned P5-billion. The average interest rate for the one-year T-bill increased by 9.6 basis points to 6.215%. Accepted yields ranged from 6.15% to 6.25%.

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However, the newly released 10-year bonds will only beff

The papers that were auctioned on Tuesday were previously sold on Aug. 30, with the government earning the expected amount of P30 billion. The average rate recorded was 6.22%.

The Treasury aims to generate P150 billion through the local market in the current month, with P60 billion from T-bills and P90 billion from T-bonds.

The government obtains loans from both domestic and international sources in order to finance its budget deficit.ficit, which is capped at 6.1% of gross domestic product this year. — AMCS with Reuters