Peso GS Weekly: Curve steepens as demand shifts

What happened last week

At the beginning of the week, local bonds opened quietly with yields marginally higher, as profit-taking emerged amid a lack of fresh catalysts. T-bill auctions drew strong demand, with bid-to-cover ratios more than four times and average yields falling by up to 4 basis points.

Mid-week, sentiment shifted after the Bureau of the Treasury’s final bond auction of the year saw robust demand. The 3-year FXTN 7-64 and 10-year FXTN 10-73 were awarded near the lower end of expectations, triggering a rally that pushed yields down by 1–3 basis points across the curve.

Buying momentum persisted at the end of the week, with yields dropping another 3–7.5 basis points, led by the belly of the curve. The recently reissued FXTN 10-73 outperformed, falling to 5.80%, while the curve