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Peso GS Weekly: Dovish data flattens yield curve
Local bond market rallies, as soft inflation and GDP data reinforce BSP’s dovish tone, driving strong interest in medium to long tenors.
By Metrobank Local Currency Trading Department and Janssen Roman
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What happened last week
The local government securities (GS) market started the week cautiously, tracking the uptick in global bond yields.
Activity in the local GS market was subdued at first, but interest gradually picked up, particularly in the 3-4Y and 8-10Y tenors, where good two-way flow was observed. A key focus was on the new 10-year benchmark (10-73), which continued to attract interest, while the weekly T-bill auction saw strong demand, with yields largely unchanged from the prior week.
Momentum shifted midweek following the release of a weaker-than-expected April inflation at 1.4%, spurring a brief bond rally. Dealers quickly took profits ahead of the 7-year bond auction (10-69), which was well-received and with awarded yields being within expectations. Dovish comments from Fina
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