RATES OF THE Treasury bills (T-bill) on offer today will likely move sideways following better-than-expected inflation data.
The Bureau of the Treasury is offering P15 billion worth of T-bills on Monday, broken down into P4 billion and P5 billion via three- and six-month papers, respectively, and P6 billion from the one-year debt papers.
A trader said on Friday that yields on the T-bills on the auction block on Monday will likely move sideways or five basis points higher from the previous auction.
Last week, the Treasury borrowed P15 billion as planned at its T-bills auction, with bids totalling P25.741 billion. Rates of the 91- and 364-day securities declined to 5.635% and 5.961%, respectively, while the 182-day debt notes fetched a higher rate of 5.958%.
At the secondary market on Friday, the three-month, six-month and one-year papers were quoted at 5.761%, 5.966% and 6.077%, respectively.
Another trader expects flat to lower yields “on better CPI (consumer price index) data.”
Inflation eased for a fifth straight month in March to 3.3%, the Philippine Statistics Authority reported on Friday. This was the slowest pace since January 2018’s 3.4% and sat near the lower end of the 3.1-3.9% forecast range of the Bangko Sentral ng Pilipinas (BSP).
BSP Deputy Governor Diwa C. Guinigundo said the central bank still needs to “be very careful” in setting local interest rates in the context of a global economic slowdown.
“We need to see a clear disinflationary trend established by more observations of within target monthly inflation readings with year-to-date inflation firmly settling within the range,” Mr. Guinigundo said in a text message. “We also want to see inflationary expectations turning out in broad consistency with the inflation objective.”
The first trader said even as March inflation printed a slower pace, the market reacted to BSP’s “cautious” pronouncements that a slow inflation may not be enough to warrant immediate cuts in the reserve requirement ratio and the policy rate.
“[The BSP] wants to be prudent due to upside risks to inflation, citing El Niño and rising global oil prices,” the first trader said.
The government plans to borrow P315 billion from the domestic market this quarter, broken down into P195 billion in T-bills and P120 billion in Treasury bonds.
The government plans to borrow P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — K.A.N. Vidal