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Peso GS Weekly: Selling momentum to continue in the near term
Yield curve may show some steepening, with players aggressively pricing in cuts by the central bank.
By Metrobank Local Currency Trading Department and Geraldine Wambangco
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WHAT HAPPENED LAST WEEK
The recent buying momentum stalled last week in the peso government securities (GS) after the Bureau of the Treasury (BTr) surprised the market by upsizing its awards in its 10-year TAP facility.
Strong demand was initially seen in the reissuance of Fixed Rate Treasury Note (FXTN) 10-72 as it was awarded at the average of 6.212%, with accepted yields ranging from 6.18% – 6.223%, or close to the lower end of the market’s expected range. Total volume subscribed was strong as well, with the Bureau of the Treasury (BTr) receiving PHP 96 billion in tenders.
This enticed the BTr to open the TAP facility for bonds for the second straight week. Initially, the BTr announced that it will be offering an additional PHP 20 billion via the TAP but eventually surprised the market