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The Radar Report: Extend duration amid rate cut expectations
Should you go for shorter-term bonds now that expectations of rate cuts are pretty strong? Our analysis shows that longer-term bonds are still better.
By Ruben Zamora, EA Aguirre, Marian Monette Florendo, Joshua Tatlonghari
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The Philippines is leading the pack in terms of economic growth in Asia in 2023. Inflation may be elevated and economic output may have slowed, but certain areas are brimming with potential, especially those on the priority list of the current administration.
We still see 100 basis points of rate cuts by the Bangko Sentral ng Pilipinas as the US Federal Reserve is expected to cut rates by June. Although markets are shifting from aggressive rate cuts to 3 to 4 incremental cuts, we still believe that going for longer-duration bonds is still the prudent thing to do for now.