YIELDS on government securities (GS) mostly went down last week, with the Bangko Sentral ng Pilipinas (BSP) expected to cut rates again on Thursday and as markets awaited the US Federal Reserve鈥檚 annual symposium.
GS yields, which move opposite to prices, declined by an average of 2.22 basis points (bps) week on week, based on the PHP Bloomberg Valuation Service Reference Rates as of Aug. 22 published on the Philippine Dealing System鈥檚 website.
At the short end of the curve, yields on the 91-, 182-, and 364-day Treasury bills went down by 3.43 bps (to 5.2578%), 2.36 bps (5.483%), and 6.07 bps (5.5985%), respectively.
At the belly of the curve, yields ended mixed. The rates of the two- and three-year Treasury bonds (T-bonds) rose by 1.43 bps (to 5.674%) and 0.58 bp (5.7419%), respectively. Meanwhile, the four-, five-, and seven-year T-bonds went down by 0.11 bp, 0.4 bp, and 0.33 bp to yield 5.7948%, 5.8429%, and 5.9221%, respectively.
Lastly, at the long end, rates dropped across the board, with yields on the 10-, 20-, and 25-year bonds going down by 0.66 bp (to 6%), 6.51 bps (6.3514%), and 6.61 bps (6.3509%), respectively.
GS volume traded slid to P53.37 billion on Friday from P61.1 billion a week prior.
鈥淧rospects of the much awaited 25-bp cut by Bangko Sentral ng Pilipinas has pushed rates lower,鈥 Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message.
鈥淚nvestors are convinced that BSP will be able to deliver a 25-bp cut [this] week,鈥 a bond trader likewise said.
The Monetary Board will hold its policy meeting on Thursday (Aug. 28).
BSP Governor Eli M. Remolona, Jr. earlier said that another rate cut is 鈥渜uite likely鈥 at this week鈥檚 review as they expect inflation to remain within target this year.
The bond trader added that GS yields were 鈥済enerally lower鈥 last week following the 鈥渟trong鈥 10-year bond auction on Tuesday.
鈥淗owever, profit taking was seen ahead of the Jackson Hole symposium,鈥 the trader added.
The Bureau of the Treasury borrowed P25 billion as planned via the reissued 10-year bonds it auctioned off last week at an average rate of 5.997%.
For this week, the market will likely monitor the BSP鈥檚 meeting for potential policy hints, the bond trader said. 鈥淭he market is just waiting for confirmation before we head another leg lower in terms of bond yields.鈥 鈥 Pierce Oel A. Montalvo
