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Peso GS Weekly: Keeping an eye on the 10-year auction
This week, the 10-year auction takes center stage. It is an opportunity for those who were priced out of the 7-year offering last week to take positions.
By Geraldine Wambangco
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WHAT HAPPENED LAST WEEK
Lackluster activity seeped into the peso government securities (GS) market early last week, despite the Fixed Rate Treasury Note (FXTN) 3-25 maturity that freed up around PHP 140 billion of liquidity in the market.
Investor interest was mostly seen for short-term peso GS with sizable volume being dealt for 0.5-year Retail Treasury Bond (RTB) 3-11 given the value it provides against similar-tenored Treasury Bills (T-bills). The Bureau of the Treasury (BTr) was then seen partially awarding only around PHP 10 billion for the reissuance of FXTN 7-70 and capped the high of the auction at 6.373%, or near the bottom range of market expectations.
Post-auction, players showed buying interest in medium- to long-term peso GS on renewed appetite for duration. Buying momentum carried out in the succeeding sessions, but key economic releases on the global front were a cause for concern for some market participants. This eventually tempered the rally.
Despite elevated US yields, buying interest, mostly in longer-tenored bonds in the 15-year space, caused risk sentiment to turn at the end of the week. The scarcity of supply in the back-end l