Yield of three month papers dropped to its lowest level in almost one year yesterday as investors expect the third round of asset purchases by the Federal Reserve will spur fund flows into emerging markets like the Philippines.
The 91-day Treasury bills recorded a yield of 0.745 percent in yesterday's auction, allowing the government to make a full-award of P1 billion for the tenor as total tenders for the papers amounted to P7.814 billion.
"Because of the quantitative easing, there were views that there may be a reaction from our monetary authorities on that. But it's just a healthy reaction from the market because our inflation remains very much in control as well as our fiscal deficit," National Treasurer Roberto B. Tan told reporters.
Data from the Bureau of Treasury showed that Monday's three-month papers yield result was still higher compared with the government's record lows of 0.438 percent fetched on September 5, 2011.
On the other hand, the yields on the longer-term 181 and 364-day debt papers also dropped during yesterday's auction.
The average rate of the 181-day T-bill fell to 1.445 percent. Total tenders for this paper amounted to P8.193 billion, more than triple the offer of P2.5 billion. The average rate of the 364-day T-bill fell to 1.906 percent as investors tendered P7.860 billion. The government sold P4 billion worth of the paper.
Last week, emerging-market stocks rose the most since June, currencies strengthened and borrowing costs fell as the Federal Reserve's new round of stimulus measures boosted confidence in the global economy.
The Fed's announcement of a third round of asset purchases that came with a pledge, for the first time, that it will buy bonds until the economy recovers and keep the benchmark interest rate near zero until at least the middle of 2015 was expected to spur more inflows into emerging markets. (CSL)