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Peso GS Weekly: Downward momentum continues
With a paucity of catalysts this week, expect players to track global bonds for direction.
By Metrobank Local Currency Trading Department and Geraldine Wambangco
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WHAT HAPPENED LAST WEEK
The peso government securities (GS) market continued its downward momentum last week in anticipation of the Bangko Sentral ng Pilipinas’ (BSP) potential interest rate cut at its next Monetary Board meeting on August 15.
The reissuance of Fixed Rate Treasury Note (FXTN) 20-17 on Tuesday was awarded at an average of 6.286% and a high of 6.29%, or below the market’s expected range. The auction was almost 4x oversubscribed, which led the Bureau of the Treasury (BTr) to open the TAP facility for another PHP 10 billion, which was easily absorbed by the market.
The appetite for long-term peso GS remained strong as yields in this tenor bucket rallied or moved lower by as much as 15 basis points (bps). Medium-term securities, on the other hand, fell by 7 to 10 bps.
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