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Peso GS Weekly: Supply of long-term bonds to persist
With the yield curve much flatter, there is more value in 7-year bonds, which are performing better than 5-year bonds.
By Geraldine Wambangco and Metrobank Local Currency Trading Department
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WHAT HAPPENED LAST WEEK
Activity in the peso government securities (GS) market started slow as players were mostly reducing positions ahead of the US inflation release and the results of the US Federal Reserve policy rate meeting last June 12.
On Tuesday, risk-taking appetite or buying interest slowly emerged as dealers and clients opportunistically participated in the 10-year auction. The Bureau of the Treasury (BTr) was seen partially awarding the auction as accepted yields were capped at the high of 6.78%. Total awards were only PHP 26.225 billion with the average printing at 6.754%. Had the BTr fully awarded the auction, the high would have been set at 6.79%, while the average would have been set at 6.761%.
In the middle of the week, US Treasury yields fell sharply due to the softer US
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