Peso GS Weekly: Continue to be nimble
It is better to load up in the upcoming auctions. For those not in a rush for long-tenored peso bonds, there’s still value in short-dated ones.
WHAT HAPPENED LAST WEEK
Better buying interest was seen in the peso government securities (GS) market early last week as players digested headlines of a potential pause in the Bangko Sentral ng Pilipinas’ (BSP) monetary tightening cycle amid slowing inflation seen in the past few months.
Risk appetite was further fueled by the strength of the 13-year auction for the reissuance of Fixed Rate Treasury Note (FXTN) 13-1, which was awarded at an average of 5.854% and a high of 5.874%. The 13-year bond also garnered strong interest in the secondary market as it traded by as much as 15 basis points (bps) lower from its auction average.
Other medium- to long-term peso GS followed suit as investors tried to pick up long-dated bonds. The 20-year benchmark peso yield was taken down to the 5.80% level as there was a lack of bond supply in this tenor bucket.
The BSP was then seen keeping the key policy rate unchanged, or just in-line with expectations for the much-awaited Monetary Board meeting, and lowered the inflation forecast for the year to 5.5% vs. the previous 6.0%.
To end the week, the peso GS market finally tracked the move higher in US Treasur