Peso GS Weekly: Hawkish BSP triggers de-risking

Local bonds opened on a weak footing, as higher US Treasury yields over the long weekend spilled into the Peso Government Securities (GS) market. The curve steepened, led by the 10-year benchmark (10-73), which climbed to 5.895%. Meanwhile, belly and intermediate tenors rose 3–4 basis points (bps). Selling reflected global rate pressures rather than local fundamentals.
 

At mid-week, attention shifted squarely to central bank decisions, with markets positioning for both the Federal Open Market Committee (FOMC) and Bangko Sentral ng Pilipinas (BSP) policy meetings. Initial trading remained cautious, tracking global yields, though some bottom-fishing emerged ahead of policy announcements. The US Federal Reserve’s rate cut and dovish tone briefly supported bonds, pushing yields 2–4 bps lower in the morning session.
 

By the end of the week, sentiment reversed sharply after the BSP delivered a widely expected 25-bp cut but struck a hawkish tone, with Governor Eli Remolona signaling that the easing cycle may be nearing its end. This triggered aggressive de-risking, lifting most benchmarks by 5–11 bps, particularly in the 5–10 year sector. The 10-year yield breached 6.00%, while belly bonds underperformed amid year-end position trimming.

With no major local catalysts this week, trading is likely to remain range-bound but biased toward caution, as markets digest the BSP’s hawkish messaging. Global bond movements—especially US Treasuries—will remain the primary driver of volatility. We expect selective opportunities to emerge on outsized yield spikes, while overall activity may moderate as year-end seasonality sets in.

Note: Rates are indicative and subject to refresh.
 

For more information on Peso Government Securities, you may reach out to your investment specialist or log on to Metrobank Wealth Manager. We offer lower fees of 0.050% for every successful buy or sell transaction placed on Wealth Manager until December 31, 2025.
 

— with Maria Christina Virtudazo

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. 

MARIA CHRISTINA “YNA” VIRTUDAZO is an Investment Counselor at Metrobank’s Institutional Investors Coverage Division. Her work involves analyzing High Net Worth clients’ portfolios and providing actionable insights and recommendations to better enhance their portfolios’ overall returns. She is a licensed Fixed Income Market Salesperson of the Securities and Exchange Commission and a certified Unit Investment Trust Fund (UITF) salesperson. She graduated with a bachelor’s degree in business administration from the University of the Philippines – Diliman. She spends her free time listening to K-pop, writing fanfiction, and watching Netflix series and K-dramas.