Jitters from US tariffs drive down T-bond yields

MANILA, Philippines — Yields on the government’s long-dated and short-dated securities declined compared to the previous week’s auction, following the United States’ tariff increase on Philippine goods and heightened expectations of potential interest rate cuts.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the tariff could weaken the Philippine economy, reinforcing the need for further monetary easing through potential interest rate cuts to support growth.

The 10-year tenor yielded 6.285 percent, 3.2 basis points higher than the market reference, but still lower than the previous 10-year auction of 6.428 percent average last June 17.

Ricafort said external risks threatening the pace of global economic expansion may spill over to the domestic economy, justifying the need for supportive monetary policies or easing strategies to sustain local growth.

The Treasury upsized short-term securities to P28.4 billion from the P25 billion goal, while long-term securities raised P25 billion.

For Treasury bills (T-bills), the 91-day short-term securities increased by 4.4 basis points to of 5.475 percent from 5.431 percent market yield, yet lower than last week’s auction of 5.526 percent.

Rates for the 182-day tenor averaged 5.575 percent from the previous week’s 5.618 percent, and 6.7 basis points below the reference rate of 5.642 percent.

Yields averaged 5.65 percent for the 364-day T-bills, 3.3 basis points below the secondary market rate and lower than the 5.656 percent average last week.

“Treasury bill (T-bill) average auction yields were again mostly slightly lower for the second straight week, amid uncertainties that Trump’s tariffs or trade wars could slow down the global economy,” Ricafort said.

A total of P7 billion was awarded for the three-month tenor and P9.5 billion was allocated for the 364-day offering.

Meanwhile, the Treasury raised P11.9 billion on the 182-day tenor as they accepted non-competitive bids that were doubled from the P8.5 billion offering.

BSP Governor Eli Remolona Jr. earlier suggested an interest rate cut within the year two more times, which could further reduce the policy rate to 4.75 percent from 5.25 percent.