T-bills, bond rates set to rise again

October 31, 2021 | 00h00

MANILA, Philippines – T-bill rates could move sideways next week, the same way short-term securities have behaved in previous weeks, traders said.

However, rates on reissued five-year T-bonds, with a remaining term of four years and five months, could climb to 32.4 basis points next week.

“We expect Treasury yields to move sideways in the same way as in previous weeks. On the flip side, we expect Treasury bond rates to settle between 3.9% and 4%, ”said one trader.

Another trader said investors could look at the inflation forecast for October, as well as the Federal Open Market Committee (FOMC) meeting on Monday and Tuesday. They are expected to incorporate the results of the inflation data and the FOMC meeting into their offers not just for this week, but for the rest of November.

“For this week, investors will be watching inflation data on the local end and the expected reduction in the United States,” the trader said.

The Bangko Sentral ng Pilipinas (BSP) expects October inflation to be in the 4.5% and 5.3% range due to price increases, mainly fuel prices.

The BSP said spikes in electricity bills, fish and fruit bills, as well as the peso’s depreciation against the dollar, also contributed to October’s inflationary pressure.

“Inflation will be largely driven by upward adjustments in domestic oil prices. Rising electricity tariffs from Meralco, rising fish and fruit prices and the depreciation of the peso will put further upward pressure, ”BSP said on Friday.