THE auction sale of term deposits at the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed a clear preference for short-dated tenors as players remained cautious ahead of the United States Federal Reserve (the Fed) rate-setting meeting this week.
Term-deposit facility (TDF) auction results indicated strong interest by commercial banks and trust entities in the central bank’s seven-day term-deposit offer, with tenders nearly doubling the amount offered.
In particular, the tenders aggregated P59.17 billion, exceeding the P30 billion offered by the central bank for the week.
“Ahead of the FOMC [Federal Open Market Committee] tonight, there is market preference for the shorter tenor, even as it is widely expected that the Fed will keep rates steady,” BSP Governor Amando M. Tetangco Jr. told reporters on Wednesday.
The longer tenor of 28 days was also oversubscribed, with tenders reaching P181.29 billion of the P150 billion offered for the week.
Rates, meanwhile, remained broadly stable, with both tenors still hitting above the main policy rate of the central bank.
In particular, the seven-day tenor fetched yields averaging 3.0306 percent this week, up from 3.0269 percent last week. The 28-day tenor, meanwhile, fetched yields reaching 3.432 percent, down from 3.4338 percent last week.
The central bank governor said they will continue to monitor the developments in the auction facility as to be factored in their own monetary-policy decision-making next week.
“Just like the market, we will look out for the Fed’s assessment of labor conditions and outlook on inflation. We will take any relevant information into consideration in our own assessment of domestic inflation dynamics at our policy meeting next week,” the governor said.