We are shifting our overweight allocation to equities as we anticipate more upside potential despite expected interest rate cuts by the Banko Sentral ng Pilipinas (BSP) and the US Federal Reserve. With yields projected to trend lower, investors can lock in gains from investments in fixed income and reallocate to equities, which we expect will offer higher returns as a result of improving market sentiment and stronger earnings growth. This strategy aims to capture the momentum in the equity market while maintaining a balanced exposure to fixed income.
2024 Metrobank Forecast | 2025 Metrobank Forecast | 2026 Metrobank Forecast | |
---|---|---|---|
GDP | 5.6% | 6.2% | 6.2% |
Inflation | 3.2% | 3.2% | 3.0% |
BSP Target Reverse Repurchase Rate | 5.75% | 5.00% | 4.25% |
Federal Funds Rate | 4.50% | 3.75% | 3% |
USD/PHP | 58.8 | 57.9 | 56.5 |
Initial jobless claims rose for the week ended November 30 by 9,000 to 224,000, mostly due to volatility around the Thanksgiving holiday, which came five days later than last year. The timing of the holiday can range from November 22-28, creating difficulties in seasonally adjusting the data. Jobless claims are set to surge toward the end of the year and into mid-January after Boeing Co. presented a range of measures to cut costs, including a 10% reduction in the workforce, and Stellantis announced layoffs. Sources:Bloomberg
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