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Peso GS Weekly: Significant demand in the belly of the curve
At current levels, take profit at the longer-tenor bonds and shift to bonds in the belly of the curve.
By Metrobank Local Currency Trading Department and Joshua Enrick Tatlonghari
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WHAT HAPPENED LAST WEEK
It was a good week for the local space as aggressive risk-taking continued to push local yields 5-15 basis points lower across benchmark tenors week-over-week (WoW). The move mostly followed the rally in the global bond space, with market participants growing more confident and adding positions ahead of the potential start of the easing cycle.
On the auction front, T-bill offerings showed strong demand, with the Bureau of the Treasury (BTr) fully awarding their T-bill offering at rates 3.5 basis points lower than last week’s auction. It also fully awarded the reissuance of 20-14 (3Y) at an average of 6.009% and a high of 6.034%, which was within market expectations. Despite decent demand for the 3Y auction, the GS curve ended flatter, with dealers looking to load up