RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be offered this week could be mixed, with overseas uncertainties affecting global bond markets.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.
On Tuesday, the government will offer P30 billion in reissued 10-year T-bonds with a remaining life of seven years and six months.
The rates of the T-bills and T-bonds on offer this week could track the mixed movements in secondary market yields as uncertainties continue to cause volatility in global markets,
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
At the secondary market on Friday, yields on the 91- and 182-day T-bills went down by 0.92 basis point (bp) and 4.35 bps week on week to end at 5.2702% and 5.5681%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of March 7 published on the Philippine Dealing System’s website. Meanwhile, the 364-day paper’s rate went up by 0.99 bp to 5.7941%.
On the other hand, the 10-year bond rose 8.52 bp week on week to fetch 6.1025% on Friday. The seven-year paper, the tenor closest to the remaining life of the bonds to be offered on Tuesday, jumped by 9.89 bps to end at 6.2097%.
Secondary market yields were mostly higher last week as concerns over the US’ policies and their impact on the global economy affected market sentiment.
GS yields also mostly moved sideways on Friday before the release of US nonfarm payrolls data, which could affect the Federal Reserve’s policy path, a trader said in an e-mail.
The trader added that the reissued bonds on offer this week could be “well received” and fetch rates ranging from 6.16% to 6.2%.
US job growth picked up in February, but cracks are emerging in the once-resilient labor market amid a chaotic trade policy and deep federal government spending cuts that threaten to disrupt economic growth this year, Reuters reported.
The Labor department’s closely watched employment report on Friday, the first under President Donald J. Trump’s watch, showed a broader measure of unemployment surging to near a 3-1/2-year high last month as the ranks of part-time workers swelled.
Nonfarm payrolls increased by 151,000 jobs last month after rising by a downwardly revised 125,000 in January, the Labor department’s Bureau of Labor Statistics said.
Mr. Trump triggered a trade war last week, slapping a new 25% tariff on imports from Mexico and Canada, along with a doubling of duties on Chinese goods to 20%. But on Thursday, Mr. Trump exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25% duty.
The Federal Reserve is expected to keep its benchmark overnight interest rate unchanged in the 4.25%-4.5% range this month as policy makers continue to monitor the economic impact of tariffs and an immigration crackdown.
Financial markets expect the US central bank to resume rate cuts in June, though much would depend on inflation.
The Fed paused rate cuts in January, having reduced the policy rate by 100 bps since September, when it embarked on its easing cycle. The policy rate was hiked by 5.25 percentage points in 2022 and 2023 to tame inflation.
Fed Chair Jerome H. Powell said on Friday “we do not need to be in a hurry, and are well positioned to wait for greater clarity.”
Last week, the government raised P22 billion as planned from the T-bills it auctioned off as total bids reached P85.474 billion, almost four times as much as the amount on offer.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as tenders for the tenor reached P37.48 billion. The three-month paper was quoted at an average rate of 5.283%, easing by 4.6 bps from the previous auction, with accepted rates ranging from 5.28% to 5.358%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P24.51 billion. The average rate of the six-month T-bill was at 5.61%, 6.2 bps lower, with the BTr only accepting bids with this yield.
Lastly, the Treasury raised the programmed P8 billion via the 364-day debt papers as demand for the tenor totaled P23.484 billion. The average rate of the one-year debt rose by 1.6 bps to 5.77%, with bids accepted carrying yields of 5.625% to 5.788%.
Meanwhile, the bonds to be offered on Tuesday were last offered on Feb. 11, where the BTr raised P30 billion as planned at an average rate of 5.968%, lower than the 6.375% coupon rate.
The BTr is looking to raise P147 billion from the domestic market this month, or P22 billion from T-bills and P125 billion from T-bonds. The government borrows to help fund its budget deficit, which is capped at P1.54 trillion this year. — A.M.C. Sy with Reuters