MIXED RESULTS. The rate of Treasury bills (T-bills) goes on different ways on Monday (August 1, 2022), which an economist says is in line with local benchmark rates. The Bureau of the Treasury (BTr) fully awarded all tenors during the auction. (PNA file photo)

MANILA – The rates of Treasury bills (T-bills) posted mixed results on Monday, which an economist traced to comparable path of local interest rates on hints of additional hikes in the coming weeks.

The average rate of the 91-day T-bill declined to 2.090 percent from 2.273 percent during the auction last July 25.

However, the rate of the 182-day and 364-day papers rose to 3.188 percent and 3.480 percent, respectively.

These were at 3.143 percent for the six-month paper and 3.356 percent for the one-year tenor during the previous week’s auction.

The Bureau of the Treasury (BTr) offered all the tenors for PHP5 billion each and the auction committee made a full award across-the-board.

Total tenders for the three-month paper reached PHP24.073 billion while it amounted to PHP12.94 billion for the six-month and PHP6.293 billion for the one-year.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the T-bill rates’ outcome during the day to “the continued week-on-week rise in comparable PHP BVAL (Philippine Bloomberg Valuation Service) short-term yields, amid signals of possible further increase in local policy rates on the next rate-setting meeting (on) August 18.”

He is referring to the rate-setting meeting of the Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB), which is expected to hike the central bank’s key rates by 25-50 basis points.

Ricafort said the rate hike expectations from the BSP follows the same projection for the Federal Reserve’s funds rates, which were hiked anew by 75 basis points last July 27.

He said rate of the three-month paper “is already below the comparable PHP BVAL yield at 2.20 percent and also still below the BSP key overnight borrowing rate of 3.25 percent.”

BVAL yield is an evaluated reference interest rate recognized by market participants as benchmark rates for the bond market.

Ricafort said amidst the uptick in the rates of the six-month and one-year paper, “Treasury bill auction yields are still way below the inflation rate of 6.1 percent posted in June 2022.”

In a report released on Monday, Ricafort said short-term PHP BVAL yields “continued to go up week-on-week” but those of the three to 15-year tenors “sharply eased week-on-week.”

He projects the same performance for short-term BVAL yields “since they are still unusually below inflation” as well as the widely expected hikes in the Federal Reserve’s key rates and the expectations for additional increase in the BSP’ key rates.

For the long-term PHP BVAL, Ricafort forecasts this to continue to decline “after reaching pre-pandemic highs last month (highest in two to three years) amid risk of US recession that could slow down any future Fed rate hikes and could slow down inflation/prices amid the recent downward correction in the prices of global crude oil and other global commodities that also partly led to lower US long-term inflation expectations recently.” (PNA)