It’s time to take profit on 7- to 10-year peso government securities
If you have taken advantage of the 7- to 10-year bonds last month, you may now take profit to lock in your gains.
In our previous article about our trade plan titled “Go for the “sweet spot”: Buy 7- to 10-year bonds”, we recommended a tactical buy on 7- to 10-year peso government securities.
Now is an opportune time to take profit. These bonds have seen a significant pick-up in price, with yields lower by around 90 basis points (bps) month-on-month. The recent rally is due to investors’ hefty demand for new, longer-dated bond issuances, in the Bureau of the Treasury (BTr)’s weekly auctions.
Yields may be close to peaking
Although some follow-through buying may still be observed in the near-term, we think that yields in the 7- to 10-year space may be nearing their resistance levels, given the sharp drop in yields in the past few weeks.
If you were one of those who were able to capitalize on the trade p