T-bill, bond rates to track secondary mart levels

RATES of Treasury bills and bonds on offer this week could track secondary market levels amid easing global crude oil prices and following comments from US Federal Reserve Chair Jerome H. Powell.

The government will auction off P10 billion in Treasury bills (T-bills) on Monday, or P3 billion each in 91- and 182-day papers and P4 billion in 364-day papers.

On Tuesday, it will offer P20 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and eight months.

T-bill yields could rise this week, while the reissued 10-year T-bonds could decline, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Friday, the rates of the 91-, 182-, and 364-day T-bills went down by 37.54 basis points (bps), 30.47 bps, and 49.28 bps week on week to end at 5.3645%, 5.6329%, and 5.7766%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website.

Meanwhile, the yield on the 10-year bond went down by 8.12 bps to end at 6.2291% on Friday.

Secondary market rates went down amid lower global crude oil prices and comments from the Fed chair, Mr. Ricafort said.

Meanwhile, a trader expects the 10-year bond to fetch yields of 6.25-6.35%.

“The 10-year bond auction [this] week should be interesting as we suspect speculative trades remain heavy… This will reveal if investment books will be supportive,” the trader said in an e-mail.

On Friday, oil prices settled more than 2% lower for a second consecutive day, with the market unconvinced the latest round of production cuts will be enough to lift prices from a recent slump, Reuters reported.

US crude settled down by 2.49% at $74.07 per barrel and Brent ended at $78.88, down by 2.45% on the day.

Meanwhile, the risks of the Federal Reserve slowing the economy more than necessary have become “more balanced” with those of not moving interest rates high enough to control inflation, Mr. Powell said on Friday, reaffirming the US central bank’s intent to be cautious but also offering fresh optimism on its progress so far.

Noting that a key measure of inflation averaged 2.5% over the six months ending in October, near the Fed’s 2% target, Mr. Powell said it was clear that US monetary policy was slowing the economy as expected with a benchmark overnight interest rate “well into restrictive territory.”

As the Fed goes forward, “the data will tell us if we need to do more” rate hikes, Mr. Powell said as he fielded questions from Spelman College President Helene Gayle after his opening remarks at the historically black college.

The US central bank kept the fed funds rate steady at the 5.25%-5.5% range for a second straight time during its Oct. 31-Nov. 1 meeting.

It has hiked rates by a cumulative 525 basis points (bps) since it began its tightening cycle in March 2022.

The Fed will next meet on Dec. 12-13 to review policy.

Last week, the BTr raised P10 billion as planned via the T-bills it offered on Tuesday as total bids reached P72.215 billion, more than seven times the amount on the auction block.

Broken down, the Treasury made a full P3-billion award of the 91-day T-bills, with tenders for the tenor reaching P25.615 billion. Its average rate fell by 137 bps to 4.753%. Accepted rates ranged from 4.72% to 4.78%.

The government likewise borrowed the programmed P3 billion through the 182-day securities, as bids for the paper reached P22.38 billion. The average rate for the six-month T-bill went down by 133.2 bps to 5.181%, with accepted yields ranging from 5.11% to 5.27%.

Lastly, the BTr raised P4 billion as planned via the 364-day debt papers, with bids reaching P24.22 billion. The average rate of the one-year T-bill went down by 83.3 bps to 5.727%. Accepted yields were from 5.59% to 5.75%.

Meanwhile, the reissued 10-year bonds to be offered on Tuesday were last auctioned off on Nov. 14, where the government raised P30 billion as planned at an average rate of 6.781%. Accepted yields ranged from 6.748% to 6.8%.

The BTr wants to raise P60 billion from the domestic market this month, or P20 billion via T-bills and P40 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year — A.M.C. Sy with Reuters