Peso GS Weekly: Anticipated rate cut spurs activity
We still prefer 5- to 7-year bonds as they continue to provide the most decent term-premium across the curve.

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WHAT HAPPENED LAST WEEK
Better selling interest in the peso government securities (GS) was seen to start last week as players de-risked ahead of the 20-year supply, with most bonds trading 4 basis points (bps) higher. Given the flat shape of the local GS curve and the market still absorbing the additional supply of 10-year bonds from the previous week, participants continued to be better sellers towards the first half of the week.
In last Wednesday’s reissuance of the 20-Year benchmark Fixed Rate Treasury Note (FXTN) 20-27, the Bureau of the Treasury (BTr) fully awarded the reissuance within market indications at an average of 6.43% and a high of 6.47%. Auction participation was relatively subdued compared to the previous two issuances, as the bid-to-cover ratio only reached 1.8x despite t