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Peso GS Weekly: Expect bonds to trade higher amid risks
The bond market will continue to demand for more premium amid upbeat US data, geopolitical tensions in the Middle East, and local inflation risks.
By Geraldine Wambangco, Metrobank Government Securities Trading Department
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WHAT HAPPENED LAST WEEK
The peso government securities (GS) market saw a one-way move in last week’s session as the market was greeted with soaring global yields over the course of the local and Muslim holidays.
In last week’s auction, the Bureau of the Treasury (BTr) was seen capping awarded yields for 10-year Fixed Rate Treasury Note (FXTN) 10-72. As a result, only around PHP 20 billion was awarded out of the PHP 30 billion offering. The high was stopped at 6.48% as total tendered bids only reached around PHP 37 billion. Had the BTr fully awarded the whole issuance, the high would have been set at 6.574%.
Strong US inflation figures also triggered the selloff in US yields that also dragged the local bond market. Participants have pulled pack their expectations of cuts to be implemented b