T-BOND RATE INCREASES. The average rate of the five-year Treasury bond (T-bond) increases on Tuesday (June 7, 2022) thus, the partial award amounts to PHP25.189 billion. National Treasurer Rosalia de Leon traced the increase in the debt paper's yield to another acceleration in the domestic inflation rate last May to 5.4 percent and expectations for more hikes in the policy rates of both the Bangko Sentral ng Pilipinas (BSP) and the Federal Reserve. (Photo from BTr)

MANILA – The continued acceleration of the domestic inflation rate made investors demand a higher yield, which resulted in the partial award by the Bureau of the Treasury (BTr) of the five-year Treasury bond (T-bond) on Tuesday. 
 
The average rate of the debt paper rose to 5.514 percent from 4.968 percent previously. 
 
The BTr offered the debt paper for PHP35 billion but the auction committee awarded PHP25.189 billion. Total tenders reached PHP48.8 billion. 
 
In a Viber message to journalists, National Treasurer Rosalia de Leon traced the results of the T-bond auction to the increase in the inflation rate last May, which accelerated further to 5.4 percent from the previous month’s 4.9 percent. 
 
“Markets remained cautious of both statements from Fed (Federal Reserve) and Gov (Bangko Sentral ng Pilipinas Governor Benjamin Diokno) on respective rate action of 50 (basis points) and 25 bps hike to temper inflation,” she said. 
 
The Fed has increased its key rates by a total of 75 basis points since last March to address the four-decade high inflation rate in the US, which last April decelerated to 8.3 percent after hitting 8.5 percent in the previous month. 
 
The BSP’s key rates have been increased by 25 basis points last May, the first since December 2018 after the 200 basis points increase in 2020, and monetary authorities noted that the continued recovery of the domestic economy provides the central bank the leeway to increase rates to help tame the supply side-driven inflation rate.  (PNA)