UMVA has learned that the rates of Treasury bills (T-bills) and Treasury bonds (T-bonds) to be offered this week may end mixed, as slower-than-expected May inflation data tempered earlier bets of aggressive tightening by the central bank.
The Bureau of the Treasury will auction off up to P60 billion in T-bills on Monday, with P20-30 billion in 91-day papers, P15-20 billion in 182-day securities, and P7-10 billion in 364-day debt. This move comes as investors eagerly await the outcome of the auction.
On Tuesday, the government is targeting to raise up to P65 billion from a dual-tenor T-bond offering, broken down into P30-40 billion in reissued seven-year T-bonds and P20-25 billion in 25-year notes. The T-bond offering is expected to attract significant interest from investors.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said T-bill yields could correct lower after mostly rising for the past six weeks, as comparable secondary market rates went down following the slower-than-expected latest local inflation data. This could reduce the urgency for an immediate central bank rate hike.
Despite this, aggressive monetary action cannot be completely ruled out, as the latest inflation rate at 6.8% remains way above the central bank’s inflation target of 2%-4%. The central bank's next meeting is on June 18, and investors are eagerly awaiting the outcome.
A trader said the government securities market was generally quiet despite the lower-than-expected CPI print, with yields in the four-year to five-year space declining by around 2-3 basis points. The trader also predicted that the reissued seven-year bonds could fetch yields of 7.2%-7.25%, while the reissued 25-year notes could be quoted at 7.6%-7.7%.
In the T-bills space, the Bureau of the Treasury increased borrowing size for the 91-day bill to P20-30 billion from P15-20 billion to keep up with the demand. This move is expected to attract significant interest from investors.
At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills went down by 3.31 basis points, 3.96 basis points, and 4.23 basis points week on week. This decline in yields is a significant development in the market.
Inflation settled at 6.8% in May, slowing from 7.2% in April but still faster than the 1.3% in the same month last year. This was the first time since November 2025 that the headline print eased month on month.
The central bank said it will continue to monitor developments in the Middle East, with inflation expected to remain above its comfort band this year and next. The Monetary Board will reassess the macroeconomic outlook to incorporate the May CPI, Q1 national accounts, and key domestic and international developments.
Last week, the Bureau of the Treasury raised P40 billion as planned via the T-bills it auctioned off, with total tenders reaching P70.505 billion. The Treasury is looking to raise P268 billion from the domestic market this month, or P128 billion via T-bills and P140 billion through T-bonds.
