The Bureau of the Treasury (BTr) made a full award of Treasury bills amounting to P20 billion in its auction on Monday which saw rates increase across the board amid persisting tensions in the Middle East and expectations of a Federal Reserve’s policy rate freeze.

The BTr auctioned off 91-day, 182-day, and 364-day papers which drew total bids amounting to P51.7 billion, larger by 2.6 times than the programmed offer.

The government agency awarded the entire P6.5 billion for the three-month papers which fetched an average rate of 5.444 percent, up from 5.414 percent seen in the auction on 7 October.

The BTr awarded another P6.5 billion for the six-month papers which registered an average rate of 5.668 percent, higher than the 5.474 percent posted during last week’s auction.

Last week, the BTr awarded P7 billion for the one-year papers which fetched an average rate of 5.623 percent, an increase from 5.540 percent in the previous auction.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the latest auction results reflected investors’ worries about fewer gains due to inflation risks.

“Global crude oil prices were among the one-month highs amid increased tensions in the Middle East since 1 October, when Iran made a second missile attack on Israel,” he said.

“The markets are awaiting Israel’s possible response to Iran’s attacks and see risks from possible damage on Iran’s oil facilities,” Ricafort continued.

In a Reuters report, Israeli Defense Minister Yoav Gallant warned Iran of a “lethal, precise and surprising” attack.

Iranian assets face action

To prevent further aggression, Al Jazeera reported the US Treasury and State Department said they may freeze the assets of firms transporting Iranian oil, threatening to cripple Iran’s economy.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said higher oil prices could raise overall inflation this month to 3 percent from 1.9 percent in September.

Ricafort added rates of government securities could match those of US Treasury yields amid analysts’ projections that the Federal Reserve might hold off reducing its policy rate further next month due to strong consumption of goods and services.