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Peso GS Trade Idea: Is it time to lock in gains?
Following the recent rally in global and local bond markets, we see an opportunity to shift to our top short-term bond picks while waiting for the primary auctions early next year.
By Patty Membrebe
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Markets have celebrated the shift in tone by the US Federal Reserve—from talking tough and doubling down on the higher-US-rates-for-longer message in November, to telegraphing that a pivot could be underway even earlier than anticipated.
US Treasuries have rallied quite significantly, with the 2-year US yield lower by as much as 88 basis points (bps) and the 10-year yield lower by 110 bps since the Fed’s peak hawkishness in mid-October. With the rally in global yields, the past year has also been good to holders of long-dated peso government securities (GS).
Lock-in gains
Late October, we flagged an opportunity to buy long-term peso GS with tenors of 10 years and beyond as the local market tracked the sell-off in global yields. Our trade recommendation came out around the time when US 10-y