Peso GS Weekly: RTB anticipation caps bond moves 

What happened last week

Last week began with some profit-taking after the prior rally, causing belly to long-end bonds to rise by 1 to 1.5 basis points. Despite this, the T-bill auction saw strong demand, with average awarded yields moving sideways to slightly lower, and the six-month tenor upsized for the fourth consecutive week. Market participants began positioning for the reduced-volume 20-year bond auction scheduled mid-week.

Mid-week, local bonds traded sideways despite a weaker peso and higher US Treasury yields. The Bureau of the Treasury successfully reissued PHP 20 billion of FXTN 20-27 at an average rate of 6.584%, with demand moderately healthy. Activity was focused on the 9- to 10-year space, while cautious sentiment prevailed in the 3- to 6-year segment, as investors awaited