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MANILA, Philippines — After investors demanded a higher yield, the Bureau of the Treasury (BTr) partially awarded the 10-year Treasury bond (T-bond) on Tuesday.

It proposed PHP 35 billion for the debt paper, which was awarded PHP 34.892 billion by the auction committee. The total amount of bids received was PHP67.294 billion.

T-bond rates increased to 7.145 percent, up from 4.831 percent previously.

Demand for the debt paper remained strong, according to National Treasurer Rosalia de Leon, albeit at a “high price.”

“The market provided a cushion against back-to-back rate hikes to be delivered by both (the) Fed and (the) BSP (Bangko Sentral ng Pilipinas) in the next policy meetings to slaughter the ugly head of inflation,” she said in a Viber message to journalists.

The Federal Reserve has raised its benchmark interest rates by a total of 150 basis points since March to combat the rising consumer price index (CPI), which reached 8.6% in May, the highest level since 1981.

The BSP raised its key policy rates by 25 basis points in May, the first time since December 2018 and following a 200-basis-point decrease in 2020 as part of pandemic-related measures.

Although inflation is expected to rise further, BSP Governor Benjamin Diokno has hinted at another rate hike on June 23, stating that while the rate of inflation is expected to rise further, the domestic economic recovery gives monetary authorities the leeway to address the accelerating rate of price increases.

Last May, domestic inflation accelerated to 5.4 percent, exceeding the government’s 2-4 percent target through 2023 for the second month in a row.

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