| 91-day T-bill rate falls below 1% The yield on the 91-day treasury bills again fell below 1 percent, easing to an average 0.979 percent as investors swamped Monday’s government auction. The average rate was 109.4 basis points lower than the 2.073 percent set in the previous auction two weeks ago. Also, Monday’s average was 87.1 basis points lower than the corresponding yield for deals done in the secondary market that averaged 1.85 percent. Interest rates on the 182-day treasury bills also fell 125 basis points to an average 1 percent while those for the 364-day paper slid to an historic low of 1.5 percent. The average for the six-month bill was 97.5 basis points lower than the prevailing average for deals at the Philippine Dealing and Exchange Corp. trading board, which was 1.975 percent. On the other hand, the average for the year-long bills was 87.5 basis points lower than the 2.375 percent in the secondary market. The Treasury awarded P3 billion in six-month bills and P4 billion in year-long securities, which were the full amounts it offered for each maturity. National Treasurer Roberto B. Tan said the auction results indicated that there was “a lot of liquidity [and that fund managers] are looking for investment opportunities.” Tan said the market’s behavior on Monday might have been influenced by the withdrawal of funds from the local stock market. “Some of the T-bill subscriptions may be from foreign investors who cannot go to special deposit accounts,” Tan added. The SDA facility is one of the tools that the Bangko Sentral ng Pilipinas uses to control the supply of money in the local economy and this, in turn, influences consumer prices. However, unlike treasury bills, SDAs cannot be traded. As for the benchmark bill, the government raised P2.8 billion, or P800 million more than planned due to the high volume of tenders. On Monday, the government raised a total of P9.8 billion with investors offering a total of P43.03 billion. Tenders for the three-month bills reached P14.69 billion or more than seven times the P2 billion on offer. Bids for the six-month bills reached P13.7 billion, or more than four times the P3 billion available. Tenders for the year-long bill totaled P14.64 billion, more than thrice the offer of P4 billion. |
| U.S. Stocks Rise on Fed Bets as Banks, Energy Shares Pare Gains U.S. stocks rose, rebounding from the biggest four-week decline by the Standard & Poor’s 500 Index since 2009, amid speculation the Federal Reserve will take steps to stimulate the world’s largest economy. Equities pared gains as financial and energy shares trimmed their advance by the most, while Bank of America Corp. (BAC) tumbled 5.2 percent. Alcoa Inc. (AA) and General Electric Co. (GE) added at least 1 percent, pacing gains among companies most-tied to the economy. Lowe’s Cos. rose 1.2 percent after the home-improvement retailer announced a $5 billion stock buyback. Boeing Co. rallied 1.8 percent as people familiar with the matter said Delta Air Lines Inc. plans to order 100 of the company’s jets. The S&P 500 gained 0.6 percent to 1,130.55 at 11:17 a.m. in New York, after rallying as much as 2 percent earlier today. The benchmark index slumped 4.7 percent last week, giving it a 16 percent loss since July 22. The Dow Jones Industrial Average added 79.35 points, or 0.7 percent, to 10,897 today. Fed Chairman Ben S. Bernanke is scheduled to speak at a central bank meeting on Aug. 26 in Jackson Hole, Wyoming. “People are of the belief that there’s an increasing likelihood of a new quantitative easing program,” Mark Luschini, the chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion, said in a phone interview. “We hold no expectation that we’re going to see that. The hurdle remains pretty high. I’m a little concerned that if get some rally on that expectation and it doesn’t come through, that the equity market would be set for a decline. Treasuries Fall on Speculation Fed’s Bernanke to Will Signal More Stimulus Treasuries fell amid speculation Federal Reserve Chairman Ben S. Bernanke will signal additional measures to stimulate the economy, damping demand for the safest assets. Treasury two-year note yields touched the highest in two weeks amid concern yields that dropped to record lows this month will erode demand when the U.S. sells $99 billion of debt this week. Bernanke is scheduled to speak Aug. 26 in Jackson Hole, Wyoming at an annual conference sponsored by the Fed Bank of Kansas City. Stocks pared earlier gains. “The market is floundering lower around Treasury supply and Bernanke coming,” said Sean Murphy, a trader at Societe Generale SA in New York, one of the 20 primary dealers that trade with the Fed. “The jury is still out on if we are going to get more from Bernanke or not, so the market is in a wait- and-see mode.” Ten-year yields rose four basis points to 2.11 percent at 5:02 p.m. in New York, according to Bloomberg Bond Trader prices. The 2.125 percent note due August 2021 fell 12/32, or $3.75 per $1,000 face amount, to 100 5/32. The record low yield of 1.97 percent was set Aug. 18. Two-year note yields rose one basis point to 0.20 percent, touching the most since Aug. 8. The Standard & Poor’s 500 Index closed little changed after gaining as much as 2 percent. |
| Oil Drops From Three-Day High as U.S. Equities Decline, Stockpiles to Rise Oil dropped from a three-day high in New York as investors bet that increasing stockpiles and signs of a slowing U.S. economy indicate fuel demand will falter in the world’s biggest crude-consuming nation. Futures slipped as much as 0.4 percent today after most U.S. equities fell. An Energy Department report tomorrow may show crude inventories rose 1.5 million barrels in the seven days ended Aug. 19, climbing for a second week. London-traded Brent declined yesterday on speculation that Libyan production may recover after rebels entered the capital city of Tripoli in a push to force out Muammar Qaddafi. Crude for October delivery fell as much as 33 cents to $84.09 a barrel in electronic trading on the New York Mercantile Exchange, and was at $84.29 at 8:59 a.m. Sydney time. The contract yesterday gained $2.01, or 2.4 percent, to $84.42, the highest since Aug. 17. The September future expired yesterday. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
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Rhys Cruz
Junior Researcher
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