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October
8
The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- US Treasury yields rallied while three Wall Street major indexes closed down around 1% on Monday amid a stronger-than-expected jobs report and concerns about the impact of the rising tension in the Middle East on oil prices.
- Oil prices rose by more than 3% on Monday, with Brent surpassing USD 80 per barrel while Brent crude futures and West Texas Intermediate futures increased by 3.7% amid growing conflict in the Middle East.
- The Philippines’ dollar reserves increased to a record high of USD 112 billion at the end of September from the USD 107.9 billion at the end of August, posting an increase of 14.2% year-on-year and 3.8% month-on-month, the Bangko Sentral ng Pilipinas (BSP) said on Monday.
- According to Budget Secretary Amenah F. Pangandaman, the Development Budget Coordination Committee (DBCC) may hold a special meeting to review the gross domestic product (GDP) growth target for this year amid the 1.9% September inflation.
- The Philippine Stock Exchange index (PSEi) posted its best close in five years on Monday, rising by 1.16% or 86.76 points to 7,554.68, while the broader all shares index climbed by 1.02% or 41.32 points to 4,082.97.
Our Portfolio Recommendation
Given our expectation of falling peso interest rates, we recommend maintaining an overweight position on fixed income assets to improve the portfolio’s risk and return exposure. Opportunistic investors may consider reinstating positions in medium- to long-term peso bonds at more favorable levels through the upcoming primary issuances. We then see an opportunity to shift to a neutral stance on equities towards the second half of the year, as we expect investors to lock-in gains from their overweight-fixed income positions ahead of the anticipated rate cuts by the BSP.
| 2024 Metrobank Forecast | 2025 Metrobank Forecast | |
|---|---|---|
| GDP | 5.7% | 6.2% |
| Inflation | 3.3% | 3.1% |
| Target BSP Reverse Repurchase Rate | 5.75% | 4.75% |
| USD/PHP Trend | 55.3 | 54.5 |
CHART OF THE DAY
Chart of the Day
Middle East conflict continues to push oil prices up
Oil prices increased more than 3% on Monday, with Brent settling above USD 80 per barrel for the first time since August amid the mounting tensions in the Middle East. Both Brent crude futures and West Texas Intermediate (WTI) futures rose by 3.7% to settle at USD 80.93 and USD 77.14, respectively. The increased risk of a wider Middle East conflict started pushing prices up last week, reversing the downtrend of oil prices in August and September. Sources: Bloomberg, Reuters
Featured Reports
More Reads
USD/PHP closes higher after stronger US jobs report
- The USD/PHP exchange rate opened at 56.64, after a higher-than-expected US Nonfarm Payrolls print.
- The local currency pair was sold down to the morning’s low of 56.58 as it tracked the dollar’s decline in the global space.
- The pair stayed supported due to fixing demand before shooting up to highs of 56.68 before noon as the dollar in Asia recovered upward.
- The USD/PHP exchange rate ultimately closed at 56.825, or 53 centavos lower day-on-day.
- The hotter-than-expected US Nonfarm Payrolls point towards a possible return to the 57-levels for the USD/PHP exchanger rate in the near-term.
- The current support levels of USD/PHP are at 56.20/56.40 while the resistance levels are at 56.90/57.00.
READ MORE
Weak risk sentiment pushes local yields higher
- Risk sentiment in the local government securities (GS) market declined due to the strong US Jobs report and rising USD/PHP exchange rate, pushing GS yields higher, especially in the 5- to 10-Year space.
- The 20-Year benchmark, Fixed Rate Treasury Note (FXTN) 20-27, reached the 6% level for the first time since last month.
- Most benchmark bonds traded 9 to 19 basis points (bps) higher compared to last Friday, except for Retail Treasury Bond 5-13, which ended only 2.5 bps higher at 5.425%.
- The T-bills auction saw weak results, with the Bureau of Treasury awarding at yields 6 to 47 bps higher than last week’s issuance.
- The focus remains on buying during sell-offs, especially given the limited T-bond supply and with PHP 120-billion in funds being freed up by the maturity of FXTN 5-76 on October 17.
READ MORE
PSEi closes at new year-to-date high since 2020
- The Philippine Stock Exchange index (PSEi) ended 86.76 points higher at 7,554.68, pushing the local index to the highest levels since 2020.
- Net foreign buying remained solid at PHP 1.35 billion, marking the 26th consecutive session of inflows.
- Sectoral performance was mixed but largely positive, with Property (+2.05%) leading the charge, while Financials (-0.46%) lagged.
- Puregold Price Club Inc. (+8.49%) emerged as the top gainer, while the Bank of the Philippine Islands (-1.66%) was the day’s worst performer.
- The positive sentiment was fueled by risk-on appetite, supported by strong US employment data, which reaffirmed the resilience of the US economy.
- In corporate news, Vista Land raised PHP 3 billion from its follow-on offering of Series 2 Preferred Shares.
READ MORE
USD/PHP closes higher after stronger US jobs report
- The USD/PHP exchange rate opened at 56.64, after a higher-than-expected US Nonfarm Payrolls print.
- The local currency pair was sold down to the morning’s low of 56.58 as it tracked the dollar’s decline in the global space.
- The pair stayed supported due to fixing demand before shooting up to highs of 56.68 before noon as the dollar in Asia recovered upward.
- The USD/PHP exchange rate ultimately closed at 56.825, or 53 centavos lower day-on-day.
- The hotter-than-expected US Nonfarm Payrolls point towards a possible return to the 57-levels for the USD/PHP exchanger rate in the near-term.
- The current support levels of USD/PHP are at 56.20/56.40 while the resistance levels are at 56.90/57.00.
READ MORE
Weak risk sentiment pushes local yields higher
- Risk sentiment in the local government securities (GS) market declined due to the strong US Jobs report and rising USD/PHP exchange rate, pushing GS yields higher, especially in the 5- to 10-Year space.
- The 20-Year benchmark, Fixed Rate Treasury Note (FXTN) 20-27, reached the 6% level for the first time since last month.
- Most benchmark bonds traded 9 to 19 basis points (bps) higher compared to last Friday, except for Retail Treasury Bond 5-13, which ended only 2.5 bps higher at 5.425%.
- The T-bills auction saw weak results, with the Bureau of Treasury awarding at yields 6 to 47 bps higher than last week’s issuance.
- The focus remains on buying during sell-offs, especially given the limited T-bond supply and with PHP 120-billion in funds being freed up by the maturity of FXTN 5-76 on October 17.
READ MORE
PSEi closes at new year-to-date high since 2020
- The Philippine Stock Exchange index (PSEi) ended 86.76 points higher at 7,554.68, pushing the local index to the highest levels since 2020.
- Net foreign buying remained solid at PHP 1.35 billion, marking the 26th consecutive session of inflows.
- Sectoral performance was mixed but largely positive, with Property (+2.05%) leading the charge, while Financials (-0.46%) lagged.
- Puregold Price Club Inc. (+8.49%) emerged as the top gainer, while the Bank of the Philippine Islands (-1.66%) was the day’s worst performer.
- The positive sentiment was fueled by risk-on appetite, supported by strong US employment data, which reaffirmed the resilience of the US economy.
- In corporate news, Vista Land raised PHP 3 billion from its follow-on offering of Series 2 Preferred Shares.
READ MORE