The cycle continues: Fed to support the labor market
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Green light for BSP
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Inflation stays subdued at 2.3%
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21
The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- Two Federal Reserve governors on Wednesday gave competing views on inflation. One expressed concerns on price rise while another was confident that cost pressure will continue to ease.
- Many economists expect the Fed to slash interest rates by a quarter point in December but see shallower cuts in 2025 on inflation risk of Donald Trump’s proposed policies, a Reuters survey showed.
- The Philippines’ balance of payments swung to a USD 724 million deficit in October from a USD 3.526 billion surplus in September and a USD 1.51 billion excess in October 2023, as the government repaid external debt.
- The Department of Agriculture is considering importing an additional 8,000 metric tons of fish after consecutive typhoons damaged fisheries.
- The peso sank to an over two-year low, closing at PHP 58.91 per dollar on Wednesday amid escalation in the Russia-Ukraine war and expectations of Trump’s dollar-strengthening policies.
Our Portfolio Recommendation
We are shifting our overweight allocation to equities as we anticipate more upside potential despite expected interest rate cuts by the Banko Sentral ng Pilipinas (BSP) and the US Federal Reserve. With yields projected to trend lower, investors can lock in gains from investments in fixed income and reallocate to equities, which we expect will offer higher returns as a result of improving market sentiment and stronger earnings growth. This strategy aims to capture the momentum in the equity market while maintaining a balanced exposure to fixed income.
| 2024 Metrobank Forecast | 2025 Metrobank Forecast | 2026 Metrobank Forecast | |
|---|---|---|---|
| GDP | 5.7% | 6.2% | 6.2% |
| Inflation | 3.2% | 3.2% | 3.0% |
| BSP Target Reverse Repurchase Rate | 5.75% | 4.75% | 4.25% |
| Federal Funds Rate | 4.50% | 3.50% | 3% |
| USD/PHP | 58.8 | 57.9 | 56.5 |
CHART OF THE DAY
Chart of the Day
Balance of payments’ turnabout
The Philippines’ balance of payments (BoP) – the difference between the money entering and exiting the country – swung to a deficit in October after posting surpluses in the preceding three months. The BoP now stands at a USD 724 million deficit in October, from USD 3.526 billion surplus in September and a USD 1.51 billion net receipt in the same period a year ago. This is mainly due to the government repaying external debt, which hit USD 130.182 billion at end-June. Source: Business World, Bloomberg
Featured Reports
More Reads
USD/PHP moves higher amid demand of dollars
- USD/PHP opened /Wednesday/ 1 centavo lower to 58.80, as the dips clearly supported by corporate demand of dollars.
- Remittances has remained largely absent even at these higher levels, further exacerbating the move higher
- The latter part of the day saw USD/PHP moved /TO WHAT? ON WHAT?/, as dealers were forced to lift their offers to cover compounded demand of dollar.
- USDPHP would ultimately close at 58.91, or 10 centavos higher day-on-day
- Key supports from here remain at 58.80 and 58.70 while resistance is at 58.92 and 59.00.
READ MORE
Peso GS yields trade range-bound amid lack of catalysts
- It was a choppy trading session for local bonds Wednesday, as markets players digest risk-off headlines on the global front and BSP Governor Eli Remolona’s comment on the data-dependency of policymakers’ next move at the December meeting.
- The 5 year bond, RTB 5-18, continued to be the most traded security near the 5.90% area, while 20-17 (6Y) was bought down to 5.94%.
- 20-23 (14Y) traded near the 6.08-6.14% range, possibly from end-user interest.
- Clients are still advised to be patient before aggressively reinstating positions in the back-end of the curve, given the uncertainty brought about the policies of the incoming US administration coupled with escalating Russia-Ukraine tensions.
READ MORE
PSEi rises amid dovish comments from BSP
- The Philippine Stock Exchange index (PSEi) surged higher by 172.44 points at 6,975.63
- The rally was broad-based, with all six sectors ending in the green, led by Holding Firms (+3.26%) and Financials (+2.95%).
- Notable gainers included SM (+7.09%) and BDO (+5.84%), while ALI emerged as the day’s most active stock.
- Regional markets were mixed, while locally, sentiment was buoyed by lingering optimism following dovish statements from the BSP, which hinted at possible rate cuts next year.
- In corporate news, East West Banking Corp. targets double-digit loan growth in 2024, emphasizing sustainable productivity and balanced expansion, with plans for fundraising once interest rates become more favorable.
READ MORE
USD/PHP moves higher amid demand of dollars
- USD/PHP opened /Wednesday/ 1 centavo lower to 58.80, as the dips clearly supported by corporate demand of dollars.
- Remittances has remained largely absent even at these higher levels, further exacerbating the move higher
- The latter part of the day saw USD/PHP moved /TO WHAT? ON WHAT?/, as dealers were forced to lift their offers to cover compounded demand of dollar.
- USDPHP would ultimately close at 58.91, or 10 centavos higher day-on-day
- Key supports from here remain at 58.80 and 58.70 while resistance is at 58.92 and 59.00.
READ MORE
Peso GS yields trade range-bound amid lack of catalysts
- It was a choppy trading session for local bonds Wednesday, as markets players digest risk-off headlines on the global front and BSP Governor Eli Remolona’s comment on the data-dependency of policymakers’ next move at the December meeting.
- The 5 year bond, RTB 5-18, continued to be the most traded security near the 5.90% area, while 20-17 (6Y) was bought down to 5.94%.
- 20-23 (14Y) traded near the 6.08-6.14% range, possibly from end-user interest.
- Clients are still advised to be patient before aggressively reinstating positions in the back-end of the curve, given the uncertainty brought about the policies of the incoming US administration coupled with escalating Russia-Ukraine tensions.
READ MORE
PSEi rises amid dovish comments from BSP
- The Philippine Stock Exchange index (PSEi) surged higher by 172.44 points at 6,975.63
- The rally was broad-based, with all six sectors ending in the green, led by Holding Firms (+3.26%) and Financials (+2.95%).
- Notable gainers included SM (+7.09%) and BDO (+5.84%), while ALI emerged as the day’s most active stock.
- Regional markets were mixed, while locally, sentiment was buoyed by lingering optimism following dovish statements from the BSP, which hinted at possible rate cuts next year.
- In corporate news, East West Banking Corp. targets double-digit loan growth in 2024, emphasizing sustainable productivity and balanced expansion, with plans for fundraising once interest rates become more favorable.
READ MORE