THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates continued to move sideways despite expectations that inflation went beyond the central bank’s target in August.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as tenders reached P56.91 billion, nearly four times as much as the initial offer and inching up from the P55.185 billion recorded in the previous week.

Broken down, the BTr raised P5 billion as planned via the 91-day papers from P14.384 billion in bids. The three-month debt fetched an average rate of 1.078%, inching up by 0.1 basis point (bp) from its 1.077% rate a week ago.

The Treasury also raised the programmed P5 billion via the 182-day T-bills as the tenor attracted tenders worth P21.34 billion. The average rate of the six-month instruments was unchanged at 1.405%.

Lastly, the government made a full P5-billion award of the 364-day securities it offered on Monday from P21.185 billion in tenders. The one-year debt was quoted at an average rate of 1.609%, down by 0.7 bp from the 1.616% it fetched last week.

National Treasurer Rosalia V. de Leon said the BTr made a full award of its offer of T-bills on Monday as rates were almost unchanged following “good participation” from the market even as the central bank said inflation likely picked up and went beyond its 2-4% target last month.

A bond trader said the average rates of the T-bills fell within market expectations amid expectations of higher inflation and with demand for short-tenored debt papers still strong.

Headline inflation likely quickened in August and settled above the central bank’s official target range anew, as a weaker peso pushed food prices up, according to analysts.

A BusinessWorld poll of 16 analysts yielded a median estimate of 4.4% for August inflation, near the lower end of the 4.1% to 4.9% estimate given by the Bangko Sentral ng Pilipinas (BSP).

If realized, headline inflation would again breach the central bank’s 2-4% annual target range after slowing to 4% in July. It will be the quickest in three months or since the 4.5% in May, and much faster than the 2.4% in August 2020.

The Philippine Statistics Authority will release August inflation data on Sept. 7.

Meanwhile, Ms. De Leon added that the recent speech of Federal Reserve Chairman Jerome H. Powell and the US jobs report on Friday also affected yield movements on Monday.

US Labor department data showed nonfarm payrolls increased by 235,000 last month, its smallest rise since January, Reuters reported.

On the other hand, Mr. Powell said during the US central bank’s annual Jackson Hole symposium that asset purchases could be reduced this year if the US economy continues to improve as anticipated. However, he did not give details on the timing and pace of the central bank’s plan to wind down bond purchases and hike interest rates, a message interpreted by the market as being dovish.

The bond trader said the yield curve may steepen as the Treasury offers long-dated papers weekly, but T-bill rates will only move sideways.

On Tuesday, the BTr will auction off P35 billion in reissued seven-year Treasury bonds (T-bonds), which have a remaining life of six years and 11 months.

The Treasury is looking to raise P250 billion from the local market this month: P75 billion via weekly offers of T-bills and P175 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — B.M. Laforga with Reuters