Government debt yields fall
Secondary market debt yields edged down on Friday after the seven-year bond auction and external developments, but expectations of lingering price pressures kept rates high, analysts said.
Government bond (GS) yields fell 2.24 basis points (bps) on average week-over-week, based on benchmark rates from the PHP Bloomberg valuation service as of October 29 posted on the Philippine Dealing System website.
On the short end of the curve, 91- and 182-day T-bills (T-bills) yields fell 1.65bp and 0.94bp, respectively, to 1.2131% and 1.4488%. Meanwhile, 364-day securities rose 1.24 bps to 1.6228%.
In the stomach, the rates on two, three, four, five and seven year Treasury bills (T-bonds) fell by 0.36 bps (to 2.3758%), 1.66 bps (2.8815%) , 2.25 bps (3.3554%), 3.17 basis points (3.7771%) and 7.55 basis points (4.3981%).
10 and 25 year T bonds saw their yields fall 11.8 bps to 4.8512% and 1.7 bps to 5.2138%, respectively. In contrast, the 20-year bond rate climbed from 5.24 bps to 5.1552%.
“Local bond yields have moved into a range on strong two-way interest rates week to week. After a few weeks of massive selling, the GS market finally found a breathing space after global oil prices and US Treasury yields showed signs of stabilizing, ”a bond trader said in a Viber message.
“The market was also inspired by the seven-year government issue that the BTr (Treasury Office) partially rejected,” added the bond trader.
The BTr only raised 19.315 billion pesos through the reissued seven-year Treasury bonds it sold on Tuesday, less than the scheduled 35 billion pesos, even as the paper attracted 57.215 billion pesos in offers .
The notes, which have a remaining term of six years and nine months, reached an average rate of 4.468%, 26.1 basis points higher than the 4.207% quoted in the series’ last offering on the 5th. October.
Bank of the Philippines Islands Chief Economist Emilio S. Neri, Jr. said via Viber that despite the bids being rejected by the BTr in last week’s auction, yields have remained high as the market is “aware thatflation is doomed to remain high ”despite the government’s efforts.
“High prices for oil and other energy markets, combined with persistent supply problems, have fueled such high expectations inflation could be much more persistent than originally expected. We also continued to see more central banks (e.g. the Bank of Canada) hinting that they might raise rates much sooner than expected, as inflation remains stubbornly high, ”Neri added.
The Bangko Sentral ng Pilipinas (BSP) waits inflation settled between 4.5% and 5.3% in October, above its target of 2-4% and 4.4% forecast for the year. From September, inflaverage ation of 4.5%.
The Philippine Statistics Authority is expected to release in Octoberflation data Friday.
“All the surprises on theflation or the hawkish rhetoric of monetary authorities around the world [this] week will probably be affect plus the long end of the curve. We expect the BSP to continue to downplay the importance of October byflation print as simply transient and it is unlikely that affect their policy at their meeting in November or December, ”he added.
Mr Neri said that the absence of a rise in interest rates means that the short-term yields of the curve “will remain artiFidown, just as economic fundamentals push other parts of the curve higher.
“A [inflation print] above 5% could put more upward pressure on yields, ”he said.
The next BSP monetary policy meeting is scheduled for November 18.
“All eyes are now on the Federal Open Market Committee (FOMC) meeting and the publication of the Philippine CPI (Consumer Price Index) for October, where these risky events will set the tone for the future. short-term trading, ”the bond said. said shopkeeper.
“Until then, yields should just move sideways with a slight upward bias. “
American central bank offithe cis are scheduled to meet on November 2-3. – Bernadette Thérèse M. Gadon