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Peso GS Weekly: We see the local market tracking global yields
Our advice: Continue to be opportunistic and buy bonds directly from the primary issuance.
By Geraldine Wambangco
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WHAT HAPPENED LAST WEEK
It was another volatile week for the peso government securities (GS) market as the lack of catalysts on the local front, which could drive a rally, kept players wary.
The 5-year auction on Tuesday, the issuance of Fixed Rate Treasury Note (FXTN) 5-78, was fully awarded at a coupon rate of 6.125%, or well within market expectations. The strong auction participation at 2.478x oversubscribed triggered buying interest across all tenors of peso GS. The new 5-year benchmark eventually ended the day at 6.06% or 6.5 basis points (bps) lower from its coupon.
However, the rally was short-lived as selling interest continued for the rest of the week. Two-month bonds ended the week higher by 20 bps, while medium- to long-term bonds rose 6 to 10 bps. Elsewhere, going against the