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Peso GS Weekly: Currency swings and a steepening yield curve
Behind seemingly orderly two‑way flows, currency swings and mixed auction results drove meaningful curve reshaping—reinforcing investors’ preference for the safety of short-dated securities.
By Metrobank Local Currency Trading Department and Dana Louise Geronimo
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What happened last week
The week opened with cautious tone, as higher global yields and a sharply weaker peso kept risk appetite subdued.
Selling pressure first emerged in short-dated Government Securities (GS), with yields 1–2 basis points (bps) higher. The sentiment spilled over to medium- and long-term papers, as investors were unwilling to take on higher interest rates and foreign-exchange risk associated with longer maturities. The 5Y 7-70 rose 2 bps to 5.725%, while the 8Y 10-72 underperformed, with a 4-bp increase to 5.980%.
In contrast, the Treasury bill was well-received, with the bid-to-cover ratio at five times and awarded yields 2-3 bps lower week-on-week. This highlights ongoing preference for short-dated securities.
Tuesday’s auction of FXTN 20-20 drew a lower bid-to-cover ra
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