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 | 6.0% | 6.0-7.0% |
Inflation | 4.3% ↓ | 4.3% |
Target BSP Overnight Rate | 5.50% | 4.75% |
USD/PHP Trend | 54.0 | 52.7 |
Two- and five-year US Treasury yields climbed to the highest levels this year as swaps traders and economists at Goldman Sachs Group Inc. forecast fewer interest-rate cuts by the Fed this year. The two-year yield reached 4.749%, the highest level since December 11, before paring the advance and ending the session little changed. The yield on the five-year note touched 4.367%, the highest since November 28. It points to an increasing risk that Fed officials may revise their projections to imply fewer cuts when they conclude their FOMC meeting this Wednesday, as inflation and growth data have come in better than expected. Source: Bloomberg
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