At the start of the week, Peso Government Securities (GS) trading was relatively subdued, with benchmark yields moving sideways to slightly lower by about 1–1.5 basis points. Some selling interest emerged in select mid-tenor issues, notably the 3- to 9-year space, but buying from balance‑sheet driven investors helped cap any meaningful upside in yields. In the short end, demand remained firm as evidenced by a strong Treasury Bill auction, where the bid-to-cover ratio reached 4.19x and average awarded yields fell by 2–4.5 basis points, underscoring continued preference for short-dated paper.
Two-way flows picked up on Tuesday, particularly in the 1- to 3-year segment, as market participants positioned ahead of the government’s 5-year bond auction. The reissuance of the 5-year benchmark drew robust demand, with bids exceeding three times the offer and the auction average landing near the lower end of market expectations. This outcome supported secondary market sentiment, prompting follow‑through buying in the 5-year space, while the rest of the curve remained largely range‑bound. Overall, yields closed the sessions little changed, with most tenors ending within 1–2 basis points of previous levels.
By the end of the week, market tone softened, as the USD/PHP exchange rate tested new highs, triggering light de‑risking, particularly in the front end of the curve. Short-dated bonds saw the most activity, while the belly and long end experienced selective profit‑taking ahead of upcoming 7-year supply. This resulted in modest steepening, with longer-dated bonds underperforming, as investors stayed cautious on duration. Despite the lackluster finish, two‑way interest remained healthy, suggesting latent demand on any meaningful pickup in yields.
This week, Peso GS yield movements are likely to remain driven by external factors, particularly foreign-exchange dynamics and global rate developments, in the absence of major local data. We continue to see value in the 5-year segment on bouts of weakness, while maintaining a patient stance on adding duration further out the curve given ongoing supply risks and our steepening bias.
JANSSEN ROMAN is an Investment Counselor at Metrobank, under the Institutional Investors Coverage Division. His expertise was built upon his previous roles as an Investment Specialist and Financial Markets Sector Management Trainee within Metrobank. He is pursuing his Master of Arts in Economics from Ateneo de Manila University and has earned other certifications and licenses from various regulators and educational institutions. Outside work, he dabbles in photography, travel, and motorcycle riding.
