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Peso GS Weekly: Yields react to global shifts
The Philippine bond market’s currently shaped by a mix of global developments and evolving local sentiment, warranting close analysis.
By Metrobank Local Currency Trading Department and Janssen Roman
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What happened last week
Cautious trading dominated the start of the week, as Moody’s US downgrade pushed 10Y US Treasury yields above 4.50%, de-risking in 7-10Y segments. Despite this, front-end bonds saw good demand, steepening the overall yield curve, and last week’s T-bill offerings were fully awarded.
By mid-week, local bonds opened strong, buoyed by a US Treasury rally that reversed a recent global bond cheapening. The 10-year auction saw exceptional demand, with tendered bids reaching PHP 109.5 billion, prompting the Bureau of the Treasury to open a tap facility for PHP 10 billion more than the initial offer size. That was met with robust interest, leading to local benchmark bonds ending lower.
Toward the end of week, local yields faced pressure as risk sentiment deteriorated, and US
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