Saturday, June 15, 2024

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The government has partially granted T-bills while interest rates increase.


The Treasury bills (T-bills) that were auctioned received a partial award.ff

On Monday, there may be an increase in rates due to robust US employment numbers, potentially bolstering the US Federal Reserve’s aggressive stance on policy.

The Treasury Bureau (BTr) only received P12.518 billion from the T-bills it put up for auction.ff

On Monday, despite total bids exceeding P22.564 billion, the P15-billion program fell short.ffer.

Rephrased: The Treasury borrowed P4.788 billion through 91-day T-bills despite receiving tenders of P6.898 billion, surpassing the planned amount of P5 billion. The average rate for the three-month paper was 5.806%, which is 10.8 basis points higher than last week’s full award rate of 5.698%. The accepted rates ranged from 5.74% to 5.875%.

The government only received P4.41 billion from the 182-day securities, falling short of the P5-billion goal, even though bids for the same period amounted to P7.646 billion. The average interest rate for the six-month T-bill was 6.115%, an increase of 9.2 basis points from the previous week’s full award rate of 6.023%. The accepted rates ranged from 6% to 6.175%.

Finally, the BTr granted P3.32 billion in 364-day treasury bonds, falling short of the P5-billion target, even though there was a demand of P8.02 billion for the same term. The average interest rate for the one-year T-bill increased by 9 basis points to 6.305% compared to last week’s partial award rate of 6.215%. Accepted yields ranged from 6.275% to 6.325%.

Before Monday’s auction, the 91-, 182-, and 364-day T-bills were traded at rates of 5.7119%, 6.0106%, and 6.2438%, respectively. These figures were based on data from the Treasury’s PHP Bloomberg Valuation Reference Rates.

According to a trader’s email on Monday, the increase in T-bill rates can be attributed to the recent US nonfarm payrolls report, which was better than anticipated.

According to a message sent on Viber by Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, the increase in US Treasury yields can be attributed to a robust economy, which may back the Fed’s “higher for longer” approach.

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According to Reuters, there was an action taken that alleviated concerns about increasing interest rates, which had led to a significant rise in bond yields.

The number of jobs in September was nearly twice the predicted amount of 170,000 from a survey of economists conducted by Reuters. This surprised the market as they were trying to make sense of how the US Federal Reserve will handle a robust economy and their goal of lowering rates to reach the 2% target.

According to the Labor department, there was a rise of 336,000 jobs in nonfarm payrolls last month. The data for August was also updated to reflect an addition of 227,000 jobs, which is higher than the previously reported 187,000.

The rate on the 10-year Treasury bond, which is used as a standard measure, increased by over 13 basis points in just thirty minutes following the release of the report. It reached a new high of 4.8874%, contributing to the significant decline in value seen this month.

Later on, bond yields decreased slightly from their initial highs and the three primary US stock indexes surged as investors observed a decrease in wage growth which could lead to a slowdown in inflation.

According to CME Group’s FedWatch Tool, futures traders have increased the likelihood of the Federal Reserve raising interest rates in November to 29.2%, which is higher than the previous probability of 23.7% before the data was released.

The Federal Reserve maintained its main interest rate at the range of 5.25% to 5.5% during its meeting on September 19-20.

The rate has increased by a total of 525 basis points since the start of its tightening process in March of last year.

The upcoming policy review for the Federal Open Market Committee will take place from October 31st to November 1st.

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The government plans to reissue 10-year Treasury bonds with a remaining term of five years and three months for a total of P30 billion.

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

The government relies on both domestic and international sources to secure financing for its budget shortfall, which is limited to 6.1% of the country’s total economic output for this fiscal year. – AMCS with Reuters