THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday at rates higher than secondary market levels amid uncertainties on the policies of US President-elect Donald J. Trump.
The Bureau of the Treasury (BTr) raised P30 billion as planned via the reissued 10-year bonds it auctioned off on Tuesday as total bids reached P54.219 billion or almost double the amount on offer.
This brought the total outstanding volume for the series to P293.6 billion, the Treasury said in a statement.
The bonds, which have a remaining life of seven years and eight months, were awarded at an average rate of 6.249%. Accepted yields ranged from 6.075% to 6.29%.
The average rate of the reissued papers decreased by 31.3 basis points (bps) from the 6.562% fetched for the series’ last award on July 6, 2023. This was also 50.1 bps lower than the 6.75% coupon for the issue.
However, the average rate was 2.3 bps above the 6.226% seen for the same bond series and 9.1 bps higher than the 6.158% quoted for the seven-year bond at the secondary market before Tuesday’s auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.
The T-bonds fetched rates that were higher than comparable secondary market yields as the market awaits Mr. Trump’s inauguration, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
T-bond rates rose to track the rise in US Treasury yields after the stronger-than-expected US labor data and Mr. Trump’s potential protectionist policies caused inflation concerns in the world’s largest economy, a trader said in a phone interview.
The BTr plans to raise P213 billion from the domestic market this month, or P88 billion via Treasury bills and P125 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year.
With Mr. Trump set to step back into the White House next week, the focus has been on his policies that analysts expect will boost growth but add to price pressures, Reuters reported.
The threat of tariffs along with the Federal Reserve’s stated measured approach to rate cuts this year have lifted Treasury yields and the dollar.
After a blowout jobs report on Friday reinforced support for the US central bank’s cautious stance toward further monetary policy easing this year, investors’ focus is now on the US consumer inflation report due on Wednesday.
Traders are pricing in 29 basis points of easing this year, less than the 50 basis points the Fed projected in December, when it jolted the market with its measured approach to rate cuts due to inflation worries.
US Treasury 10-year yields touched a 14-month high of 4.799% on Monday in choppy trading before pulling back. It was steady at 4.7656% on Tuesday. — Aaron Michael C. Sy with Reuters
