Peso GS Weekly: For tactical clients, be better sellers of long-term peso GS

WHAT HAPPENED LAST WEEK

It was a volatile week for the peso government securities (GS) market as opportunistic buyers were easily met by profit-takers.

Heading into the 10-year auction on Tuesday, better buying interest was seen as the 10-year bond was taken down to as low as 5.685% but closed the morning at 5.70%. The Bureau of the Treasury (BTr) then fully awarded the re-issuance of Fixed Rate Treasury Note (FXTN) 10-69 at an average of 5.732% and a high of 5.76%, or at the lower end of market indication. Despite the lower than anticipated auction results, profit-takers were quick to emerge as yields of medium to long-term peso GS rose by 5 basis points (bps).

The better-than-expected US April inflation and local first quarter Gross Domestic Product (GDP) data allowed the market to trade within range the rest of the week. Over-all, yields of medium- to long-term peso GS traded sideways for the week with an upward bias of 2.5 bps.

Market Levels (week-on-week)