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The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
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Your Morning Fix
- On July 18, minimum wage earners in Metro Manila will receive a PHP 50 daily wage increase, the largest hike ever approved by the National Wages and Productivity Commission.
- The Bangko Sentral ng Pilipinas (BSP) estimates that June headline inflation likely fell between 1.1% and 1.9%, staying below their 2-4% target range.
- The Bangko Sentral ng Pilipinas (BSP) has revised its balance of payments (BoP) deficit forecasts, now projecting a wider USD 6.3-billion deficit for 2025 due to global uncertainty, while anticipating a narrower USD 2.8-billion deficit for 2026.
- Despite current economic conditions of near 4% unemployment and falling 2.5% inflation, Chicago Federal Reserve Bank President Austan Goolsbee believes a 1970s-style stagflation is unlikely, though he acknowledges the possibility of both unemployment and inflation worsening simultaneously.
- Despite the central bank’s indication of a “very prolonged” period of steady borrowing costs to control inflation, Brazilian private economists surveyed still anticipate the benchmark Selic rate, currently at 15%, will begin to be cut to 14.75% in January.
Our Portfolio Recommendation
Our peso portfolio remains at a neutral stance of 50% fixed income and 50% equities as the BSP becomes increasingly accommodative. However, we remain cautious amid global uncertainties. The sustainability of the current bounce in local equities remains in contention, largely influenced by geopolitical jitters and cautious sentiment, as opposed to fundamentals. As for the dollar portfolio, we are shifting our global strategy back to 50% fixed income and 50% equities from the previous 60%/40% allocation because of easing US-China trade tensions. However, there is lingering uncertainty and we prefer to remain defensive despite the shift in risk sentiment.
| 2025 Metrobank Forecast | 2026 Metrobank Forecast | 2027-2029 Metrobank Forecast | |
|---|---|---|---|
| GDP | 5.7% | 6.1% | 6.0% |
| Inflation | 2.2% | 3.3% | 3.0% |
| BSP Target Reverse Repurchase Rate | 4.75% | 4.25% | 5.00% |
| Federal Funds Rate | 4.00% | 3.50% | 4.00% |
| USD/PHP | 56.9 | 57.7 | 55.0 |
CHART OF THE DAY
Chart of the Day
Euro rally gaining momentum
The euro appreciated over 3% against the dollar in June, with its value briefly touching USD 1.1788 on Friday, the highest point since 2021. This surge is largely a consequence of ongoing pressure on the US dollar, complemented by a discernible improvement in market perception of Europe. If the US Fed moves toward a more dovish stance and Europe manages to avoid a sharp slowdown, the euro rally could well extend into the second half of the year. Source: Bloomberg
Featured Reports
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USD/PHP ends lower amid dollar sell-off
- The USD/PHP exchange rate opened 3 centavos lower at 56.54 on Monday, and was rapidly sold down to 56.40 as the pair tracked the dollar sell-off in the global space.
- Importer demand kept the pair lightly supported before another round of selling caused the pair to slide below 56.30.
- A slight squeeze back to 56.40 in the afternoon did not last, with the lack of demand ultimately preventing any significant support to the topside.
- The USD/PHP exchange rate ultimately closed at 56.33, or 24 centavos lower day-on-day.
- The current support levels of USD/PHP are 57.15/25 while the resistance levels are at 56.65/75.
READ MORE
Local GS trades firmer with long-dated bonds
- The local government securities (GS) market traded firmer on Monday, following the release of the Bureau of the Treasury’s (BTr) 3rd quarter borrowing schedule, which reduced total bond auction sizes by PHP 45 billion.
- In the T-bill auction, the 3-month bill was partially awarded at 5.548%, while the 6-month and 1-year bills were fully awarded at slightly higher yields.
- The 10-year benchmark bond Fixed Rate Treasury Note 10-73 outperformed by closing 5.5 basis points (bps) lower at 6.28%, supported by the PHP 15 billion cut in 10-year issuance and continued peso strength, which attracted foreign interest.
- Yields of 7- to 20-year bonds ended the session down by as much as 5 bps, while short-dated bonds were flat to 3 bps higher.
- The BTr is reissuing PHP 30 billion of the 5-year benchmark FXTN 7-70 today.
- Market focus shifts to the June inflation print with Metrobank’s forecast at 1.6% while Bloomberg consensus is at 1.5%.
READ MORE
PSEi starts the week on a soft note
- The Philippine Stock Exchange index (PSEi) ended 43.33 points lower at 6,364.94 on Monday, as investors decided to take profit on the last trading day of the month.
- Sector-wise, Property (+2.17%) was the lone bright spot, while Financials (-1.68%) and Services (-2.20%) weighed on the index.
- Ayala Land Inc. (+4.65%), JG Summit Holdings Inc. (+4.06%), and Emperador Inc. (+2.05%) led the gainers, helping cushion the broader decline.
- Meanwhile, Jollibee Foods Corp. (-5.51%), Converge Information & Communications Technology Solutions Inc. (-3.90%), and DMCI Holdings Inc. (-2.50%) were laggards.
- Global macro headwinds and month-end portfolio rebalancing also contributed to the cautious tone.
READ MORE
USD/PHP ends lower amid dollar sell-off
- The USD/PHP exchange rate opened 3 centavos lower at 56.54 on Monday, and was rapidly sold down to 56.40 as the pair tracked the dollar sell-off in the global space.
- Importer demand kept the pair lightly supported before another round of selling caused the pair to slide below 56.30.
- A slight squeeze back to 56.40 in the afternoon did not last, with the lack of demand ultimately preventing any significant support to the topside.
- The USD/PHP exchange rate ultimately closed at 56.33, or 24 centavos lower day-on-day.
- The current support levels of USD/PHP are 57.15/25 while the resistance levels are at 56.65/75.
READ MORE
Local GS trades firmer with long-dated bonds
- The local government securities (GS) market traded firmer on Monday, following the release of the Bureau of the Treasury’s (BTr) 3rd quarter borrowing schedule, which reduced total bond auction sizes by PHP 45 billion.
- In the T-bill auction, the 3-month bill was partially awarded at 5.548%, while the 6-month and 1-year bills were fully awarded at slightly higher yields.
- The 10-year benchmark bond Fixed Rate Treasury Note 10-73 outperformed by closing 5.5 basis points (bps) lower at 6.28%, supported by the PHP 15 billion cut in 10-year issuance and continued peso strength, which attracted foreign interest.
- Yields of 7- to 20-year bonds ended the session down by as much as 5 bps, while short-dated bonds were flat to 3 bps higher.
- The BTr is reissuing PHP 30 billion of the 5-year benchmark FXTN 7-70 today.
- Market focus shifts to the June inflation print with Metrobank’s forecast at 1.6% while Bloomberg consensus is at 1.5%.
READ MORE
PSEi starts the week on a soft note
- The Philippine Stock Exchange index (PSEi) ended 43.33 points lower at 6,364.94 on Monday, as investors decided to take profit on the last trading day of the month.
- Sector-wise, Property (+2.17%) was the lone bright spot, while Financials (-1.68%) and Services (-2.20%) weighed on the index.
- Ayala Land Inc. (+4.65%), JG Summit Holdings Inc. (+4.06%), and Emperador Inc. (+2.05%) led the gainers, helping cushion the broader decline.
- Meanwhile, Jollibee Foods Corp. (-5.51%), Converge Information & Communications Technology Solutions Inc. (-3.90%), and DMCI Holdings Inc. (-2.50%) were laggards.
- Global macro headwinds and month-end portfolio rebalancing also contributed to the cautious tone.
READ MORE