T-bill rates seen rising next week

Treasury bill (T-bill) rates may rise next week due to the peso’s weakening against the dollar and the looming taper in the US.

“Factors that may affect the trading of securities this week would be the weakening of the peso and the taper in the US. The US may begin rolling back its monetary support to the economy by November as announced by the Fed,” a trader said, adding that “we expect yields for T-bills to move sideways, while rates for the reissued T-bonds may settle at 3.924 percent. ”

The peso weakened against the dollar, settling at 50.711 on Friday from 50.605 to $1 on Thursday.

In September, New Yorkbased Fitch Solutions said the peso may depreciate until 2022 as the Philippines struggles to contain the spread of COVID.

In its revised projection, Fitch said the peso may weaken at 49.2 this year and 51 to the dollar in 2022.

The US Federal Reserve in September announced it would start withdrawing its monetary support to the economy by as early as November. It will then raise interest rates within the first semester of next year to wrap up the taper.

With these, another trader said the government should anticipate yields to go beyond the levels in the secondary market for at least the remainder of 2021. The trader also said investors may become picky in participating in the bond market due to uncertainties.

“Market will most probably bid for higher yields to price in these concerns,” the trader said.

The Bureau of the Treasury will auction P15 billion worth of T-bills on Monday.