91-day T-bill rate hits new low of 0.568% Yields of 6-month, 1-year securities inch up By Ronnel Domingo This was 11.2 basis points lower than the 0.68 percent set in the previous auction two weeks ago. On the other hand, interest rates on the 182-day bills rose 5.2 basis points to an average 0.95 percent while those on the 364-day securities increased 6.4 basis points to an average 2.032 percent. Rates for the benchmark bills and the 182-day paper were lower than those for done-deals in the secondary market, which settled at 0.725 percent and one percent, respectively. However, the primary market average for the 364-day bills was higher than the 2-percent yield set in the secondary market. National Treasurer Roberto B. Tan said Monday’s rates were a result of “a confluence of news” that were favorable to maintaining the current monetary policy. One such news was about the “US Federal Reserve’s neutral stance, for the moment, about their policy rates, which influence the decision of other central monetary authorities” like the Bangko Sentral ng Pilipinas, Tan said. The BSP was the last central bank in the region to increase its policy rates from their financial crisis levels, recently cranking up by 25 basis points its overnight borrowing rate to 4.25 percent and its overnight lending rate to 6.25 percent. Tan also cited recent positive reports on the government’s first-quarter fiscal position that he said indicated that Malacañang’s economic program was turning out to be effective. Last week, the Bureau of the Treasury reported that the deficit for January-March settled at P26.2 billion, or less than a quarter of the planned P112 billion. Tan added that Monday’s auction was influenced by inflation figures remaining within the target range that the BSP adopted. As of the first quarter, the inflation rate averaged 4.1 percent, well within the BSP’s goal of between 3 and 5 percent. On Monday, investors brought forward a total of P21.82 billion worth of bids as against the P9 billion on offer. Tenders for the three-month bills reached P6.43 billion, or more than four times the P1.5-billion offering. Bids for the six-month bills totaled P6.65 billion, or almost twice the P3.5 billion offered, while those for the year-long securities reached P8.74 billion, more than twice the P4 billion being sold. The Treasury raised a total of P9.6 billion from all three maturities, exceeding the original offer that totaled P9 billion. Bidding rules allow the Treasury to double the amount it would award for non-competitive bids if, for a given tenor, such bids accounted 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 Fall as Valuations Overshadow Bin Laden Death U.S. stocks retreated, pulling the Standard & Poor’s 500 Index down from the highest level since June 2008, as a slump in commodity producers overshadowed optimism spurred by the death of Osama bin Laden. Energy shares had the biggest decline in the S&P 500 within 10 industries as crude oil prices fell. Applied Materials Inc. (AMAT) slumped 3.4 percent after JPMorgan Chase & Co. cut its rating for the world’s largest producer of chip-making equipment. Cephalon Inc. (CEPH)climbed 4 percent after Teva Pharmaceutical Industries Ltd. (TEVA) agreed to buy the company for $6.8 billion. International Coal Group Inc. (ICO) soared 31 percent after Arch Coal Inc. (ACI) agreed to purchase it for $3.4 billion. The S&P 500 slipped 0.2 percent to 1,361.22 at 4 p.m. in New York, erasing an earlier 0.5 percent advance. The Dow Jones Industrial Average lost 3.18 points, or less than 0.1 percent, to 12,807.36 after climbing as much as 65 points.
The U.S. 10-year note yield, which declined in April by the most since August, touched lows as the Federal Reserve purchased $7.24 billion of Treasuries due from May 2018 to February 2021 today as part of its debt-buying program. Speculation about terrorist attacks after Osama bin Laden died in a firefight in Pakistan also boosted demand for Treasuries after yields rose earlier on the news. The dollar dropped to a 16-month low against the euro. “The weak economy is helping the bid,” said Michael Franzese, managing director and head of Treasury trading at Wunderlich Securities Inc. in New York. “With so much money sloshing around with the weak dollar, people are putting it in Treasuries. If we took out the head of al-Qaeda, the assumption is that there may be reprisals and you want to be prepared for that.” Yields on 10-year notes fell one basis point, or 0.01 percentage point, to 3.28 percent at 5:11 p.m. in New York, according to Bloomberg Bond Trader prices, after rising as much as three basis points. The 3.625 percent note due in February 2021 rose 3/32, or 94 cents per $1,000 face amount, to 102 28/32. |
Oil Declines First Day in Four on Bin Laden Death, Manufacturing Reports Crude oil dropped for the first time in four days after al-Qaeda leader Osama bin Laden was killed in Pakistan and a report showed manufacturing cooled in April. Oil declined 0.4 percent after President Barack Obama said U.S. forces shot bin Laden yesterday. The Institute for Supply Management’s manufacturing index declined last month and a Chinese manufacturing measure dropped more than forecast. “The market is taking some of the risk premium out of it,” said Tom Bentz, a broker with BNP Paribas Commodity Futures Inc. in New York. “The manufacturing data came out and oil and gasoline have pulled back a little bit. Certainly the uptrend is slowing.” Oil for June delivery fell 41 cents to settle at $113.52 a barrel on the New York Mercantile Exchange. The contract rose 6.8 percent last month and settled at $113.93 on April 29, the highest level since Sept. 22, 2008. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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