"The BSP (Bangko Sentral ng Pilipinas) stands ready to implement a measured policy response to prevent inflation from spiraling away from the government’s target," Governor Amando M. Tetangco Jr. said in an annual financial report that was released yesterday. "The upward pressures on global commodity prices could fan inflation. Geopolitical tensions in the Middle East and North Africa have resulted in the spike in the prices of oil in the world market ... Rising energy costs could push up the cost of domestic food products, transport fares and utility charges," he added. Still, "The country’s strong external payments dynamics is seen to provide cushion against possible external shocks in the year ahead," Mr. Tetangco said. The balance of payments (BoP) yielded a surplus of $14.4 billion last year on the back of strong remittances, increased outsourcing receipts and an export sector recovery, the BSP said. Remittances grew by 8.2% to $18.8 billion, accounting for nearly 10% of gross domestic product. Foreign portfolio investments also contributed and as a result gross international reserves rose by 41% to $62.4 billion. The report also said the domestic banking system remained stable and resilient. Asset quality was said to have improved with non-performing loans remaining low at just over 3%. Capital adequacy ratios stood at 15%, well above the 10% prescribed by the central bank. Total resources of the banking system were reported to have risen to P7.2 trillion last year, an 11% increase.
This was the second time the rate of the benchmark bills dipped below one percent since the start of the year, with the first in January when it averaged 0.7 percent. The decrease came despite key policy rates at the Bangko Sentral ng Pilipinas having recently been increased by 25 basis points from historic lows of 4 percent for overnight borrowing and 6 percent for overnight lending, which where at those levels since July 2009. In Monday’s auction, the interest rate on the 91-day bills eased 27.5 basis points from the previous average of 1.125 percent. Also, interest on the 182-day bills fell 54.8 basis points to an average 1.205 percent while yield on the 364-day bills slid 67.4 basis points to an average 2.191 percent. All averages were lower than prevailing rates for done deals in the secondary market, which settled at 1.1 percent for the 91-day bills, 1.25 percent for the 182-day paper and 2.225 percent for the 364-day securities. National Treasurer Roberto B. Tan said Monday’s auction results showed that the market was still expecting higher inflation, which creates uncertainty for investors. Monday’s tenders hint that lenders “preferred to park their funds in shorter-term instruments,” Tan said. Investors brought forward a total of P31.76 billion worth of bids, more than three times the P9-billion offer. Tenders for the three-month bills reached P6.54 billion, or more than twice the original offer of P1.5 billion. Bids for the six-month bills totaled P11.22 billion, or almost thrice the P3.5 billion offered, while those for the year-long bills reached P14 billion, or three and a half times the P4 billion being sold. The Treasury raised P9.6 billion from all three tenors. Bidding rules allow the Treasury to double the amount it would award for non-competitive bids if, for a given tenor, such bids account for less than a quarter of all tenders. Non-competitive bidders do not indicate a rate in their tenders and they will get the resulting average rate when their bids are accepted. In Monday’s case, non-competitive bids for the 91-day bills were less than a quarter of total tenders for each tenor, which allowed an additional award of P600 million. |
U.S. Stocks Advance as Takeover Announcements Outweigh Technology Slump Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second day, as optimism about takeovers outweighed a drop in technology shares following a report showing lower chip sales. Freeport-McMoRan Copper & Gold Inc. (FCX) rose 1.3 percent after Minmetals Resources Ltd. (1208) offered to buy Perth-based Equinox Minerals Ltd. for about $6.5 billion. Molycorp Inc. (MCP) jumped 12 percent as the owner of the largest rare-earth deposit outsideChina bought most of a European producer. Hewlett-Packard Co. (HPQ) and Intel Corp. (INTC) retreated more than 1.1 percent after theSemiconductor Industry Association said global three-month average chip sales dropped 1.1 percent. More than five stocks rose for every four that fell on U.S. exchanges at 4 p.m. in New York. The S&P 500 advanced less than 0.1 percent to 1,332.87. The Dow Jones Industrial Average added 23.31 points, or 0.2 percent, to 12,400.03 today. “M&A activity has been reasonably strong,” said Peter Jankovskis, who helps manage about $2.7 billion at Oakbrook Investments in Lisle, Illinois. “People look at that as a sign of confidence. It’s an indication that stocks are undervalued. In addition, the U.S. economy is on fairly strong footing. That all provides support for the stock market.”
U.S. six-month bill rates fell today to a record low amid a scarcity of short-term debt. Two-year notes gained, pushing yields to a one-week low, as Chicago Fed President Charles Evans said the amount to be purchased in the central bank’s stimulus program may be “about the right number.” Fed Chairman Ben Bernanke is scheduled to speak at 7:15 p.m. in Atlanta. “We saw pretty harsh reaction last week to some of the hawks,” said Brian Edmonds, head of interest rates at Cantor Fitzgerald LP in New York, one of 20 primary dealers that trade with the U.S. central bank. “We don’t think the chairman will say we’ll raise rates quickly. We expect the Fed will raise rates, but not as soon as some of the time horizons people were saying last week.” Yields on benchmark 10-year notes fell two basis points, or 0.02 percentage point, to 3.42 percent at 5:12 p.m. in New York, according to Bloomberg Bond Trader prices. The 3.625 percent security maturing in February 2021 rose 6/32, or $1.88 per $1,000 face amount, to 101 22/32. The yield touched 3.52 percent on April 1, the highest level since March 9, a day after reaching last week’s low of 3.4 percent. Two-year note yields dropped four basis points today to 0.76 percent. Thirty-year bond yields fell one basis point to 4.48 percent after earlier touching 4.46 percent. |
Oil Rises to 30-Month High on Libya Conflct; Kuwait Says Price Is Too High Oil climbed to the highest level in 30 months in New York on speculation that U.S. economic growth may support demand and a protracted conflict in Libya will curtail supply. Futures advanced a third day after an April 1 report showed the U.S., the world’s largest crude consumer, added more jobs than economists forecast last month. Prices are too high and “worrying,” the chief executive officer of Kuwait Petroleum Corp. said today. Forces loyal to Libyan leader Muammar Qaddafi bombed an oil field south of the city of Ajdabiya, Al Jazeera television reported, heightening concern output losses from Africa’s third-largest producer may continue. “It’s becoming increasingly clear that the situation in Libya may be prolonged,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The more one looks at uprisings in the Middle East, the more one realizes they will not be easy to resolve. At the same time, oil demand is relatively inelastic to higher prices.” Crude for May delivery gained as much as 84 cents, or 0.8 percent to $108.78 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Sept. 24, 2008, and was at $108.16 at 1:39 p.m. London time. Prices are up 25 percent from a year ago. Brent oil for May settlement rose as much as $1.05, or 0.9 percent, to $119.75 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 2.7 percent last week. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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