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Peso GS Weekly: RTB demand, soft inflation fuels a rally
Strong buying momentum returned to the peso bond market, as investors responded to soft US data, lower local inflation, and robust RTB demand.
By Metrobank Local Currency Trading Department and Janssen Roman
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What happened last week
At the start of the week, weak US labor data triggered a global bond rally and weakened the dollar, prompting renewed buying interest in PHP government securities. Benchmark yields fell by at least 5 basis points (bps), with RTB 5-18 and 10-73 dropping to 5.83% and 6.135%, respectively, while the yield curve slightly flattened.
Mid-week saw continued strength after July inflation surprised to the downside at 0.9%, the lowest in nearly six years. The Bureau of the Treasury (BTr) launched RTB 5-19, raising PHP 210 billion at a 6.00% coupon, with strong demand pushing yields lower by 3.5 to 7 bps across the curve.
Toward the end of the week, buying persisted as investors with partial RTB allocations turned to the secondary market, supported by a breach below 57.00 in t
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