Peso GS Weekly: Oil, currency shocks keep yields firm

What happened last week

At the beginning of the week, investors’ sentiment remained fragile, as oil surged past USD 100 per barrel, and the dollar-peso rate hit what was then a record high of 59.71. Yields in the 3- to 10-year sector jumped by as much as 55 basis points (bps) on Monday.

Tuesday saw a brief dip in oil prices below USD 90.00, which improved liquidity despite a very weak auction of 7-year government bonds. Throughout this period, the Bureau of the Treasury (BTr) maintained a disciplined stance by rejecting the bulk of unfavorable bids.

Local bonds found temporary support mid-week, as opportunistic players pulled yields lower by up to 20 bps on Wednesday, led by the 3-year RTB 5-18. Retail interest in the 3- to 5-year tenors began to accelerate during this window, as investors