The Bureau of the Treasury (BTr) has made partial award of Treasury bills (T-bills) on Monday, raising P24.5 billion as the interest rate for the shortest tenor increased amid investors' worries on the immediate impact of Trump tariffs.

Auctioned off by the BTr were 90-day, 181-day, and 363-day T-bills, which attracted total bids amounting to P63.3 billion or 2.5 times larger than the total offer of P25 billion.

The BTr accepted P7.46 billion from its partial award of the three-month papers, which had an initial program of P8 billion.

This was after the papers' average rate rose to 5.393 percent from 5.307 percent recorded in the auction last 31 March.

Full award

However, the BTr made full award of the six-month papers worth P8 billion as the papers fetched a slightly lower average rate of 5.645 percent from 5.646 percent seen last week.

Similarly, the Treasury approved full award of the 363-day papers worth P9 billion as their average rate declined to 5.726 percent from 5.748 percent.

Rizal Commercial Banking Corporation chief economist Michael Ricafort said the yield for the 91-day papers rose after economists’ surveys point to a possible 25-basis point reduction of the policy rate of the Bangko Sentral ng Pilipinas (BSP) on Thursday.

This will bring down the BSP rate to 5.5 percent, or slightly higher than the 5.393 percent of the 91-day T-bills auctioned on Monday.

Ricafort said the BSP might cut its rate as commodity prices, including crude oil, signal lower inflation risk to investors.

"Global crude oil prices declined to new four-year lows and the peso exchange rate is still among the strongest in six months versus the US dollar which could help further ease inflationary pressures," he said.

Bigger policy rate cuts

However, T-bills with longer tenors fetched lower rates as Ricafort shared financial market analysts expect the United States' Federal Reserve to announce bigger policy rate cuts in the second half of the year.

"Fed Funds Futures now priced in more than four cuts of 25 basis points (bps) each, better than the Fed’s dot plot estimate of 50 bps for the entire year," the economist said.

"The BSP could match future Fed rate cuts in 2025 to maintain healthy levels of foreign exchange and foreign investments," Ricafort continued.