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Peso GS Weekly: Buying momentum to remain
With the recent comments of the central bank about starting the easing cycle soon, buying interest will continue. We recommend taking profits on long-dated bonds and switching to 5- to 7-year bonds.
By Metrobank Local Currency Trading Department and Geraldine Wambangco
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WHAT HAPPENED LAST WEEK
Better buying interest was seen in the peso government securities (GS) market throughout the week.
Early in the week, the Bureau of the Treasury (BTr) fully awarded the reissuance Fixed Rate Treasury Note (FXTN) 7-67 at the high of 6.440% and an average of 6.406% or towards the lower-end of market expectations. The strong auction results led to better buying interest in the local GS space despite the continued sell-off seen in global bonds. This rally would extend after the release of the slower-than-expected inflation print which came out at 3.70% year-on-year (YoY) vs the expected. 3.90% rise.
Overall, most yields ended the week lower by 5-20 basis points (bps) with longer-term peso GS outperforming. For context, RTB 5-18, the current five-year benchmark, ended th