T-bill rates seen picking up this week
Rates for Treasury bills (T-bills) available this week are “likely to range bound slightly higher”, following the sharp rise in US yields last Friday and a robust market appetite for the short-term securities.
The Bureau of the Treasury (BTr) will auction off P20 billion in Treasury bills (T-bills) on Monday or P6.5 billion each in 91- and 182-day paper and P7 billion in 364-day debt paper.
“Reception for the T-bill auction this week is expected to remain robust despite the recent spike in US yields last Friday after the US nonfarm payrolls surprised to the upside,” Dino Angelo Aquino, vice president and head of fixed income at Security Bank Corp., told Inquirer
The US nonfarm payrolls saw an increase of 254,000 jobs last month, the highest since March, according to the Labor Department’s Bureau of Labor Statistics. Economists polled by Reuters had projected a rise of 140,000 jobs, following a previously adjusted increase of 142,000 in August.
With this, the latest US job data suggests that the economy is strong and stable, making it unlikely for the US Federal Reserve to make significant policy rate cuts in the remainder of the year.
“For T-bills, it will likely be range bound to slightly higher after the huge drop the past two weeks,” Aquino added.
According to a Reuters report, the yield on benchmark US 10-year notes rose 12.5 basis points (bps) to 3.975 percent, from 3.85 percent on Thursday while the 30-year bond yield went up by 7.9 bps to 4.259 percent.
Meanwhile, the yield on the two-year note, which usually aligns with interest rate expectations, increased by 21.8 bps to 3.9321 percent, up from 3.714 percent late Thursday.
For Aquino, there’s still plenty of liquidity in the market, making T-bills a good option for parking cash. However, he noted that Treasury bond (T-bond) rates in the secondary market might go down this week because yields have recently jumped up.
In a separate interview, T-bills may continue to attract significant amount of bids as some investor continue to lock in yields before they go down further ahead of Fed and Bangko Sentral ng Pilipinas’ rate cuts for the coming months, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said.
The BTr intends to borrow P145 billion from the domestic market in October, with P100 billion sourced from T-bills and P45 billion from T-bonds.
The government relies on both local and foreign funding to cover its budget deficit, which is set at P1.48 trillion, or 5.6 percent of this year’s gross domestic product.
