Philippine T-bill yields slide ahead of July inflation data

Yields on short-dated government securities declined across the board on Monday as investors positioned ahead of the release of July inflation data next week. Auction results showed the Bureau of the Treasury (BTr) raised the programmed P50 billion from its Treasury bill (T-bill) offering after attracting strong demand, with total bids reaching P134.5 billion, or about 2.7 times the amount on offer. Notably, however, the Treasury did not offer cash management bills (CMBs) this week after bringing them back in the previous auction following a two-week hiatus. The average yield on the 91-day T-bill slipped to 5.059 percent from 5.104 percent a week earlier. The 182-day paper eased to 5.671 percent from 5.685 percent, while the benchmark 364-day debt note fell to 5.950 percent from 5.966 percent. The bond market saw yields decline a week before the Philippine Statistics Authority releases July inflation data on Aug. 5. While the Bangko Sentral ng Pilipinas and private economists have yet to release their official forecasts, July inflation data will follow two straight months of easing inflation. Further, the latest slide came even after renewed US-Iran hostilities briefly lifted global oil prices above $100 a barrel for the first time since May, raising concerns over inflation. Recent positive developments in the Philippines continue to support market sentiment. The $60-million compact grant from the US Millennium Challenge Corp. and the country’s new upper middle-income status should strengthen the country’s credit profile and boost investor confidence. The national government will borrow P2.68 trillion in 2026, sourcing P2.05 trillion domestically and P627.1 billion from foreign lenders. The borrowing plan will finance the revised budget deficit target of P1.658 trillion, equivalent to 5.4 percent of gross domestic product, and push the country’s outstanding debt above P19 trillion by year-end.