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Peso GS Weekly: Better selling outpaces initial buying after key central bank decisions
Market shifts to increased demand in short-dated securities in response to BSP’s Reserve Requirement Ratio 250-bp cut next month.
By Metrobank Local Currency Trading Department and Maria Christina Virtudazo
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WHAT HAPPENED LAST WEEK
The local government securities (GS) market saw increased volatility last week after the Bangko Sentral ng Pilipinas (BSP) Monetary Board members provided guidance as to what to expect next month.
The Bureau of Treasury (BTr) fully awarded the reissuance of the 10-Year Fixed Rate Treasury Note 10-72 at an average of 5.967% and was seen trading at 5.920% mid-week, which was 4.7 bps lower compared from its auction average a day prior.
Following the US Federal Open Market Committee meeting where the US Federal Reserve cut key rates by 50 basis points (bps), Department of Finance Secretary Ralph Recto also mentioned that he will support a similar 50-bp cut in next month’s BSP policy meeting.
Later in the week, the BSP announced a 250-bp cut to the Reserve Ratio Requirem