MODEL PORTFOLIO
THE GIST
NEWS AND FEATURES
Global Philippines Fine Living
INSIGHTS
INVESTMENT STRATEGY
Economy Stocks Bonds Currencies
WEBINARS
2024 Mid-Year Economi Briefing, economic growth in the Philippines
2024 Mid-Year Economic Briefing: Navigating the Easing Cycle
June 21, 2024
Investing with Love
Investing with Love: A Mother’s Guide to Putting Money to Work
May 15, 2024
retirement-ss-3
Investor Series: An Introduction to Estate Planning
September 1, 2023
View All Webinars
DOWNLOADS
grocery-2-aa
Inflation Update: Target breached
DOWNLOAD
Container ship carrying container boxes import export dock with quay crane. Business commercial trade global cargo freight shipping logistic and transportation worldwide oversea concept. Generative AI
Economic Updates
Philippines Trade Update: Wider deficit on strong imports
DOWNLOAD
Frick collection with palm trees 
Economic Updates
Policy Rate Updates: Policy rate updates to reassure 
DOWNLOAD
View all Reports
Metrobank.com.ph How To Sign Up
Follow us on our platforms.

How may we help you?

TOP SEARCHES
TRENDING ARTICLES

Login

Access Exclusive Content
Login to Wealth Manager

Archives: Reuters Articles

Bear trap?

Oct 5 (Reuters) – Genuine turning point, or classic bear market rally?

World markets continue to rip higher as the dollar, bond yields and Fed interest rate expectations decline, confounding even the biggest optimists who had called for a positive start to the fourth quarter.

The strength of the turnaround suggests the turmoil in recent weeks might have been related in part to quarter-end factors. Equally, the strength of the current whoosh might simply be a bout of short covering to claw back some of this year’s losses.

According to Goldman Sachs, the median S&P 500 peak-to-trough decline in past bear markets has been 34%. That would coincide with the 3400 area from its January peak of around 4800. Friday’s low was just below 3600, down 25% from the high.

By this measure, Wall Street has further to fall before putting in the definitive bottom. It’s worth bearing in mind that bear market rallies tend to be pretty rapid, ending almost as quickly as they started.

Tuesday’s “risk-on” rally was widespread. The S&P 500 recorded its strongest two-day rise – more than 5% – since March 2020, and emerging market bonds had their best day since March this year.

US job openings data fueled hopes that the Fed will soon take its foot off the tightening pedal, Australia’s central bank only raised rates by 25 basis points and the dollar slumped more than 1% to post its longest losing streak – five days – in over a year.

It may turn out to be a bear market rally, but for now, investors are enjoying the ride.

Key developments that could provide more direction to markets on Wednesday:

Australia PMIs (September)

South Korea inflation (September)

Euro zone, UK, US PMIs (September)

US services ISM (September)

Fed’s Bostic speaks

(Reporting by Jamie NcGeever in Orlando, Fla. Editing by Josie Kao)

 

US yields slip after labor market data, RBA surprise

NEW YORK, Oct 4 (Reuters) – The yield on the benchmark US 10-year Treasury declined for a second straight day on Tuesday, after a surprise move by Australia’s central bank to slow its pace of rate hikes and US data showed job openings fell in August.

The Reserve Bank of Australia raised interest rates by a small-than-anticipated 25 basis points, noting they had already risen substantially but further tightening was also still necessary. Markets had been largely expecting a hike of 50 basis points.

The yield on 10-year Treasury notes was down 3.2 basis points to 3.619%.

Economic data showed job openings in the United States fell to 10.053 million in August, the most in nearly 2-1/2 years, short of the 10.775 million analysts’ estimated and a drop from the 11.17 million in July. A cooling of the labor market is one of the ingredients the US Federal Reserve is seeking to help ease inflationary pressures.

“The market is desperately looking for the end of the rate tightening cycle, or to be able to position a point on the horizon to focus on and unfortunately I don’t think the market has it,” said George Bory chief investment strategist for fixed income at Allspring Global Investments in Connecticut.

“We are looking for that and we will kind of attach some hope to almost anything that will help anchor that position, the reality is the Fed is determined, they want to get inflation down and to do that they need validation from the data.”

The yield on the 30-year bond was down 2.2 basis points at 3.684%.

Investors will see a host of data on the labor market this week, highlighted by Friday’s US payrolls report. Signs of softening in the jobs data would likely be welcomed by investors as it could raise expectations the US Federal Reserve may slow its own pace of interest rate hikes.

Recent comments from Fed officials have been in sync as they have vowed to take aggressive measures in hiking interest rates to combat rising inflation even after three straight hikes of 75 basis points.

On Tuesday, San Francisco Federal Reserve Bank President Mary Daly said the Fed needs to deliver further interest rate hikes and then keep restrictive policies in place until inflation gets back down to the central bank’s 2% target.

In addition, Fed Governor Philip Jefferson said inflation was the most serious problem the Fed is facing, and could take some time to address.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as a reliable indicator of recession when inverted, was at -48.2 basis points, up from -57.85 hit two weeks ago.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 0.6 basis points at 4.099%.

The break-even rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.334%, after closing at 2.255% on Monday.

The 10-year TIPS breakeven rate was last at 2.231%, indicating the market sees inflation averaging 2.2% a year for the next decade.

(Reporting by Chuck Mikolajczak; Editing by Emelia Sithole-Matarise and Chizu Nomiyama)

 

Dollar falls as US yields ease; euro rallies

NEW YORK/LONDON, Oct 4 (Reuters) – The dollar slid against major currencies on Tuesday as the yield on the benchmark US 10-year Treasury fell after Australia’s central bank surprised investors with a smaller-than-expected interest rate hike, with the euro climbing more than 1%.

The Australian dollar was down 0.2% at USD 0.6503, dragged down after the move by the Reserve Bank of Australia, which said rates had increased substantially in a short period of time.

The euro was last up 1.3% at USD 0.9848, recovering from its 20-year low of USD 0.9528 on Sept. 26, while sterling was up 0.8% at USD 1.1409, off a record low of USD 1.0327 also hit Sept. 26.

A calmer British government bond market was a relief for the pound after recent government-inspired turmoil. In a statement on Monday, the Bank of England reaffirmed its willingness to buy long-dated gilts and the head of Britain’s debt management office, overseeing the bond market, told Reuters in an interview the market was resilient.

The moves in the dollar and yields appear to partially reflect market participants’ views on the outlook for interest rates, some strategists said.

“We’re seeing a drop in interest rate expectations across the financial markets on the basis of Reserve Bank of Australia’s surprise smaller-than-expected hike,” said Karl Schamotta, chief market strategist at Corpay in Toronto.

“That has sort of had a canary in the coal mine effect from market participants globally. People are ratcheting down what they expect from the Federal Reserve and other central banks and that’s really compelling a drive out of the dollar and into risk sensitive assets.”

The yield on 10-year Treasury notes was down 6.6 basis points to 3.585%.

The Fed’s aggressive push to raise interest rates and the recent steady climb in US yields have helped to support the dollar’s sharp gains this year.

Elsewhere, the dollar was down 0.1% against the Japanese yen at 144.45 yen, keeping below 145 after briefly popping above that level on Monday for the first time since Japanese authorities intervened to support their currency on Sept. 22.

Japanese finance minister Shunichi Suzuki repeated on Monday that authorities stand ready for “decisive” steps in the foreign exchange market if “sharp and one-sided” yen moves persisted.

(Additional reporting by Kevin Buckland in Toyko and Alun John in London; Editing by Chizu Nomiyama and Andrea Ricci)

 

Gold hits 3-week high as US dollar, bond yields fall

Oct 4 (Reuters) – Gold prices rose over 1% to a three-week peak on Tuesday, as the dollar and US Treasury yields retreated, with investors hoping that the US Federal Reserve could adopt a less aggressive approach to rate hikes.

Spot gold gained 1.5% to USD 1,723.99 per ounce by 2:17 p.m. EDT (1817 GMT), its highest since Sept. 13.

US gold futures climbed 1.7% to USD 1,730.50.

Benchmark US 10-year Treasury yields eased, while the dollar extended its decline, making gold cheaper for other currency holders.

“The market is kind of pricing in that the Fed is going to back off here a little bit and that’s why you’re seeing this move back up in gold and silver,” said Bob Haberkorn, senior market strategist at RJO Futures.

Looking ahead, US non-farm payrolls data due on Friday could offer more clarity on the Fed’s policy tightening.

“If the jobs data comes out weaker-than-expected, gold will rally. If it comes out much stronger, the market might interpret that as well, the Fed can keep going here with rates,” Haberkorn added.

Gold registered its biggest daily percentage gain since March on Monday. However, rising US rates increase the opportunity cost of holding zero-yield bullion.

“Gold is not out of the woods yet, but at least we’ve seen a very strong rebound. The first move has been driven by short covering,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Gold-supplying banks have cut back shipments to India ahead of major festivals in favour of focusing on China, Turkey, and other markets where better premiums are offered, three bank officials and two vault operators told Reuters.

Spot silver rose 1.2% to USD 21.01 per ounce, a more than three-month high, following its best day since 2008 in the previous session.

Platinum gained 2.8% to USD 928.00, and palladium XPD= climbed 3.9% to a five-month high of USD 2,306.71.

(Reporting by Bharat Govind Gautam and Brijesh Patel in Bengaluru; Editing by Uttaresh V, Shailesh Kuber and Krishna Chandra Eluri)

Philippine central bank says ready to manage market disruption as peso slumps

MANILA, Oct 4 (Reuters) – The Philippine central bank said on Tuesday it was taking steps to manage any disruption in the financial market, and urged participants not to take advantage of a peso currency hovering at record lows against the dollar.

The peso closed at a record 59 to the greenback on Monday, taking its year-to-date decline to 13%, the most in Southeast Asia.

Policymakers have attributed the decline mainly to the dollar’s strength.

“We ask those who have the means not to take undue advantage of changing market conditions,” the Bangko Sentral ng Pilipinas said in a statement.

“This does not help the Philippine peso; it does not help the Philippines. What we can do is to bring all transactions into an organised and accessible formal market that offers consumer protection.”

(Reporting by Karen Lema, Editing by Ed Davies, Martin Petty)

Foreign outflows from EM Asian equities exceed 2008 outgo

Oct 4 (Reuters) – Foreigners resumed selling in Asian equities ex-China stocks in September as investors were deterred by U.S. interest rate hikes, a firmer greenback and a weaker regional growth outlook.

Data from stock exchanges in South Korea, India, Taiwan, the Philippines, Vietnam, Indonesia, and Thailand showed that foreigners sold equities worth a net $8.83 billion last month – their first monthly selling since June.

The regional equities have so far faced total outflows of $69.7 billion in the first three quarters of the year, a massive jump in outflows of $47.63 billion faced in 2008, when the global financial crisis occurred.

Last month, the U.S. Federal Reserve raised its benchmark interest rate by 75 basis points, marking the third such hike in a row. Analysts expect the U.S. central bank to keep hiking rates to tame rising inflationary pressures.

The region grapples with mounting inflationary pressures, interest rate hikes, and slowing economic growth, said Mark Haefele, chief investment officer, UBS Global Wealth Management, and added that aggressive U.S. rate hikes have also hurt the region’s currencies and its export markets.

Goldman Sachs cut the region’s 2022 and 2023 EPS growth by 2 percentage points (pps) and 3 pps respectively at the end of last month, citing the negative impact of rising rates, a stronger dollar, and slower growth on earnings.

Outflows from tech-reliant South Korea and Taiwan last month jumped to a three-month high of $1.8 billion and $5.3 billion, respectively.

India and Thailand witnessed outflows worth $903 million and $653 million, respectively, after each seeing inflows in the previous two months.

Foreigners were also net sellers of equities in the Philippines and Vietnam markets last month. On the other hand, Indonesian equities gained small inflows of $209 million.

“The cloudy outlook on economic conditions and firm policy stance from the Fed, risk sentiments may still lean towards some caution, which may lead to a lukewarm inflow for Asian equities in the near term at best,” said Yeap Jun Rong, a market strategist at IG.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Sherry Jacob-Phillips)

UK gilt market resilient despite ‘major repricing’ – debt office head

LONDON, Oct 4 (Reuters) – Britain’s bond market is undergoing “a major repricing”, but should comfortably absorb the extra 62 billion pounds (USD 69 billion) of debt announced after finance minister Kwasi Kwarteng’s Sept. 23 mini-budget, the head of the UK Debt Management Office (DMO) said on Monday.

Robert Stheeman – the man tasked with overseeing Britain’s 2.1-trillion-pound government bond market – saw a parallel between the high volatility over the past 10 days and that in March 2020 early in the COVID-19 pandemic, when the Bank of England also intervened to calm markets.

But overall the situation in recent days felt different, as bond dealers had generally been better able to keep trading, “albeit in very difficult conditions”, compared with early 2020, Stheeman told Reuters in an interview.

Ten-year British government bonds recorded their biggest calendar-month fall since at least 1957 in September, as concerns about Kwarteng’s unfunded 45 billion pounds of tax cuts added to fears of a sharp rise in interest rates by the Bank of England (BoE) and other major central banks.

Ten-year yields rose to their highest since 2008 on Sept. 28 at 4.582%, up 70 basis points from before Kwarteng’s mini-budget. They were just under 4% on Monday.

“Gilts and other sovereign bond markets are all having to undergo some major repricing,” Stheeman said.

“There are so many uncertainties … in terms of not just the fiscal picture, but the potential monetary policy response. That is what is causing … a very large part of the market volatility,” he added.

The DMO increased its 2022/23 financing target by 72 billion pounds to 234 billion pounds after Kwarteng’s mini-budget, 62 billion pounds of which would be funded by gilts.

“I am confident that it can be digested reasonably smoothly,” Stheeman said.

British government bond prices rallied on Monday after Kwarteng announced a U-turn on one of his flagship measures, saying he would no longer scrap the top rate of tax paid by the highest 1% of earners.

But Stheeman said the market was more focused on the government’s broad fiscal stance, and crucially how that would affect the pace at which the BoE will raise rates.

BoE Chief Economist Huw Pill last week warned the Bank would probably need to make a significant adjustment to interest rates on Nov. 3, when it is next scheduled to make a policy decision. The next day, the BoE stepped in to buy billions of pounds of 20- and 30-year gilts to stem a market slide.

Stheeman – whose wife sits on a BoE committee involved with the decision – said the central bank’s purchase announcement had come as a “major surprise”, in the middle of a DMO operation to sell 4.5 billion pounds of government debt.

While the timing of the announcement may have made life trickier for bond dealers, Stheeman said its unexpected nature did highlight the BoE’s independence.

CLIFF-EDGE FOR GILTS?

The BoE has said it will stop buying bonds on Oct. 14 – long enough, it believes, for pension funds hit by falling bond prices to get their houses in order – and plans to restart its postponed gilt sales programme on Oct. 31.

Asked if he was worried about these potential cliff edges, Stheeman said: “I am not unduly anxious. I think it is in the nature of the market in which we operate, that there is always potential for uncertainty, and that clearly applies now.”

Failed auctions, where the DMO is unable to raise the amount of money it is seeking on a given day, could never be ruled out, he added. The last was in 2009.

Most of the increase in debt issuance over the rest of the financial year will come from short-dated, and to a lesser extent medium-dated, gilts. Stheeman said this reflected greater liquidity in that part of the market.

Wide bid-offer spreads for gilts – which on Monday were around 10 basis points for two-year gilts GB2YT=TWEB, according to Tradeweb data – would hopefully narrow as market volatility reduced, Stheeman said.

Regulators also needed to look at how liability-driven investment (LDI) funds in the pension industry used derivatives, he added.

(USD 1 = 0.8929 pounds)

(Reporting by David Milliken; Editing by Mark Potter)

Philippines raises USD 388 million via 2025 T-bond re-issue

MANILA, Oct 4 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of re-issued 2025 T-bonds on Tuesday:

* BTr fully awards PHP 22.85 billion (USD 388.61 million) offer

* Tenders total PHP 39.144 billion

* Avg yield 5.746%

* Bonds were originally issued on April 12, 2018

 

(USD 1 = PHP 58.80)

 

Gold scales 3-week peak as dollar, yields retreat

Oct 4 (Reuters) – Gold hit a three-week high on Tuesday, spurring gains for all precious metals, as the dollar and US Treasury yields moved further from multi-year highs and revived appeal for the zero-yielding bullion.

Spot gold rose 0.5% to USD 1,707.20 per ounce by 0725 GMT, having earlier touched its highest since Sept. 13 at USD 1,710.39.

US gold futures were up 0.9% to USD 1,717.60.

The dollar index fell by 0.5%, making gold cheaper for overseas buyers, and the US 10-year Treasury yields also retreated.

The weakening dollar index and worries over a recession in the US and Europe are driving interest back into gold, said Sugandha Sachdeva, vice president of commodity and currency research at Religare Broking, adding renewed inflows into gold exchange-traded funds (ETF) show revived confidence.

Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed ETF, saw its biggest one-day inflow since June on Monday.

The focus has turned to US non-farm payrolls due later this week for signals on the Federal Reserve’s rate-hike path.

Economic data on Monday showed a slowdown in manufacturing activity, hinting at the impact of the Fed’s aggressive policy tightening. “The (gold) market may stabilise anywhere between $1,685 and $1,705 ahead of the jobs data,” Stephen Innes, managing partner at SPI Asset Management, said.

Although gold is seen as a hedge against economic uncertainties, US rate hikes increased the opportunity cost of holding bullion that pays no interest.

Spot silver climbed 1% to USD 20.96 per ounce, having earlier hit a peak since June.

“Silver was very undervalued for a long time and now, as risk sentiment is returning to the market, we are seeing a lot of buying interest coming back,” Religare’s Sachdeva said, adding green energy initiatives are expected to support demand for the metal.

Palladium jumped as much as 4.2% and was last up 3.3% at USD 2,294.79, while platinum was 1.2% higher at USD 912.85.

 

(Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Barbara Lewis)

Oil jumps more than 3% ahead of OPEC+ meeting on supply cuts

NEW YORK, Oct 4 (Reuters) – Oil rose by nearly USD 3 a barrel on Tuesday on expectations of a large cut in crude output from the OPEC+ producer group and as a weaker US dollar made oil purchases less expensive.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, look set to cut output when they meet on Wednesday. The move would squeeze supply in an oil market that energy company executives and analysts say is already tight due to healthy demand, a lack of investment and supply problems.

Brent crude settled at USD 91.80 a barrel, up USD 2.94, or 3.3%. US West Texas Intermediate (WTI) crude closed USD 2.89, or 3.5%, higher at USD 86.52 a barrel.

Sources from the group have said OPEC+, which includes Russia, is discussing output cuts in excess of 1 million barrels per day (bpd). Oil extended gains after Bloomberg reported that OPEC+ was considering a 2 million-bpd cut.

“We expect a substantial cut to be made, which will not only help to tighten the physical fundamentals but sends an important signal to the market,” Fitch Solutions said in a note.

Kuwait’s oil minister said OPEC+ would make a suitable decision to guarantee energy supply and to serve the interests of producers and consumers.

PRODUCTION TARGET

OPEC+ has boosted output this year after record cuts implemented in 2020 when the pandemic slashed demand.

In recent months, the group has failed to meet its planned output increases, missing in August by 3.6 million bpd.

The production target cut being considered is justified by the sharp decline in oil prices from recent highs, said Goldman Sachs, adding that this reinforced its bullish outlook on oil.

Also boosting oil prices, the US dollar was headed for a fifth daily loss against a basket of currencies as investors speculated that the US Federal Reserve might slow its interest rate hikes.

“There’s no doubt that there’s underlying support from a weak dollar and the potential for a Fed pivot,” said Bob Yawger, director of energy futures at Mizuho in New York.

The Fed’s potentially easing its rate hikes would relieve some worries of a US economic recession that could dampen crude demand.

Meanwhile, a senior US Treasury official said G7 sanctions on Russia will be implemented in three phases, first targeting Russian oil, then diesel and then lower-value products such as naphtha.

Sanctions from the G7 and the European Union, which is opting for a two-phase ban, are set to begin on Dec. 5.

Swiss lender UBS said it sees several factors that could send crude prices higher toward year-end, including “recovering Chinese demand, OPEC+ further supply cut, the end of the US Strategic Petroleum Reserve (SPR) release and the upcoming EU ban on Russian crude exports.”

Top oil traders also said at the Argus European Crude Conference in Geneva on Tuesday that economic headwinds have not yet caused significant erosion of global oil demand.

US crude oil and fuel stockpiles fell by about 1.8 million barrels for the week ended Sept. 30, according to market sources citing American Petroleum Institute figures.

Gasoline inventories fell by about 3.5 million barrels, while distillate stocks fell by about 4 million barrels, according to the sources, who spoke on condition of anonymity. Official inventory data is due on Wednesday.

(Additional reporting by Bozorgmehr Sharafedin in London and Isabel Kua in Singapore; Editing by Marguerita Choy, David Gregorio and Jonathan Oatis)

 

You are leaving Metrobank Wealth Insights

Please be aware that the external site policies may differ from our website Terms And Conditions and Privacy Policy. The next site will be opened in a new browser window or tab.

Cancel Proceed