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Peso GS Weekly: 6-year bonds are the sweet spot
7- to 10-year bonds are trading flat versus 6-year bonds, which are more attractive because they do not have the risk of tight supply.
By Geraldine Wambangco and Metrobank Local Currency Trading Department
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WHAT HAPPENED LAST WEEK
Strong buying interest emerged in the peso government securities (GS) market as participants were encouraged by the rally seen in US Treasuries. Risk-taking appetite was seen in medium- to long-term peso GS with bonds moving lower by as much as 20 basis points (bps).
In the middle of the week, buying interest was further boosted by the lower-than-expected April inflation print, which came out at 3.8%, vs the 4.1% consensus estimate. Retail Treasury Bond (RTB) 5-18 touched its recent low of 6.45%, while 9- to 10-year bonds were dealing near the 6.75% level despite the scheduled 10-year auction.
The strong risk-taking appetite spilled over to the 10-year auction as awarded yields were near the bottom band of the market’s expected range. For the first time in over a mo