The Bureau of the Treasury (BTr) fully awarded P22 billion worth of Treasury bills (T-bills) during its auction on Monday, despite a rise in interest rates after five weeks of decline.

The increase comes as investors anticipate smaller rate cuts from the US Federal Reserve (Fed).

The auction offered 91-day, 182-day, and 364-day debt securities, attracting total bids of P50.1 billion — 2.3 times the offered amount, indicating strong investor demand.

The BTr awarded P7 billion for the three-month papers which fetched an average rate of 5.128 percent, higher than the 5.101 percent posted in the auction last 3 February.

The Treasury awarded another P7 billion for the six-month papers which had an average rate of 5.562 percent, up from 5.477 percent in the last week’s auction.

Last, the BTr awarded P8 billion for the one-year papers which fetched an average rate of 5.726 percent, an increase from 5.671 percent in the prior auction.

Rates on upswing

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the T-bills rate increased as investors worry about the inflationary impact on goods and services from US President Donald Trump’s protectionist policies.

“Some markets are concerned that Trump’s plans for higher US import tariffs would lead to higher US inflation and fewer future Federal Reserve’s rate cuts,” Ricafort said.

He shared that investors are seeing a 36-basis point cut for this year, smaller than the 50 basis points Federal Reserve’s officials estimate.

Following Trump’s remarks on a 25 percent tariff on all steel and aluminum imports, global oil prices rose on Monday.

US-sourced WTI crude oil increased by 0.70 percent, while Europe’s Brent crude rose by 0.71 percent based on data from Bloomberg.

While economists project the Bangko Sentral ng Pilipinas (BSP) to ease its policy rate by 25 basis points to 5.5 percent on Thursday, BSP Governor Eli Remolona Jr. said its Monetary Board will be taking a “gradual” approach this year.

“T-bill yields corrected slightly higher to be usually slightly lower than short-term PHP BVAL yield in the secondary market and usually slightly higher versus the expected BSP 1-day policy rate later this week,” Ricafort said.

‘Some markets are concerned that Trump’s plans for higher US import tariffs would lead to higher US inflation and fewer future Federal Reserve’s rate cuts.’

In its December meeting last year, the BSP Monetary Board estimated local average inflation to slightly quicken to 3.4 percent this year from 3.2 percent last year and to 3.7 percent in 2026.

Ricafort added investors sought more returns after the demand for local government securities surged to over $5 billion last year.