Peso GS Weekly: Remain as opportunistic buyers on dips
Given the flatness of the peso yield curve and upward pressure on longer-term yields from supply risk with the upcoming auctions this October, we see good value in short-term bonds.
WHAT HAPPENED LAST WEEK
Trading in the peso government securities (GS) market was muted for the better part of last week as investors and dealers remained defensive following the move higher in global yields, nearing highs last seen back in 2007.
Much of the activity was observed in short-term peso GS as selling activity was met with client interest re-deploying in short-dated assets, which led 1.9-year Retail Treasury Bond (RTB) 5-13 to trade within the 6.30-6.40% area.
The much-anticipated domestic September inflation print then came out at 6.1% vs. 5.3% estimate. The significant surprise to the upside led to some knee-jerk selling in longer-dated assets as 9-year Fixed Rate Treasury Note (FXTN) 10-69 and 10-year FXTN 10-71 were both sold up to 6.60%.
But opportunistic buying interest on