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Peso GS Weekly: Rally stalls after BSP’s rate cut
A sharp rally in peso bonds reversed after the BSP’s policy rate cut sparked profit-taking and renewed selling pressure.
By Metrobank Local Currency Trading Department and Janssen Roman
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What happened last week
Risk sentiment improved early in the week after dovish remarks of US Federal Reserve (Fed) officials at Jackson Hole Symposium, pushing benchmark peso bonds 4–7 basis points (bps) lower as investors bought across the curve. The newly issued 5-year RTB 5-19 led activity, while long-dated bonds also attracted strong demand.
By mid-week, focus shifted to the Bureau of the Treasury’s (BTr) dual-tranche auction of 3-year and 25-year bonds, which saw solid demand in the shorter tenor but weaker interest in the long end. Local bonds remained well-bid ahead of the Bangko Sentral ng Pilipinas’s (BSP) monetary policy decision, with yields drifting lower across the 5–10-year space.
At the end of the week, the BSP’s move to cut policy rates by 25 bps to 5.00%, citing benign inf
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