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Peso GS Weekly: GS yield curve may steepen further
We continue to recommend staying nimble and opportunistically bid in the upcoming auctions of the Bureau of the Treasury (BTr) in order to buy longer-term bonds.
By Geraldine Wambangco and Metrobank Local Currency Trading Department
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WHAT HAPPENED LAST WEEK
Risk appetite in peso government securities (GS) continued to remain poor due to higher US Treasury yields combined with the further depreciation of the peso against the US dollar.
For the week, the average trading volume of the local GS market was only around PHP 13 billion, which is way lower than the usual PHP 30 billion. With analysts pushing back the first potential interest rate cut for the US Federal Reserve from September to December, the front end of the curve saw decent volume for the week as players were mostly selling their short-term bonds during the latter part of the week.
Retail Treasury Bond (RTB) 5-13 traded higher by 10 basis points (bps) week-on-week (WoW) and saw the bulk of the volume for front dated bonds. RTB 5-18 saw decent buying and sellin