22
The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- Markets are pricing in an 80% probability that the US Federal Reserve will raise rates by 25 basis points (bps) to a range of 4.75% to 5%, the highest since 2007, and will also take guidance from updated rate projections called the Fed Dot Plot on future hikes.
- US Treasury Secretary Janet Yellen said the US government could repeat its drastic action to protect bank depositors if smaller lenders suffer deposit runs that pose the risk of contagion, as it did with Silicon Valley Bank.
- The market’s so-called fear barometer, the Volatility Index, or VIX, saw its biggest two-day plunge in May as the coordinated actions to resolve the banking chaos eased fears of greater damage. This comes ahead of the Fed rate decision today.
- The Philippines posted a USD 895-million Balance of Payments (BoP) deficit in February on the back of foreign loan payments and a wider trade gap.
- The Philippines’ Gross International Reserves (GIR) declined 2.5% MoM to USD 98.2 billion in February, still large enough to service 7.4 months’ worth of imports of goods and payments of services.
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Our Portfolio Recommendation
With the recent moves in the markets and the depreciation of the Philippine peso, we recommend a reduction in the allocation for equities and peso-denominated investments. For long-term investors, however, equities may still be a strategically good option, though the short-term to medium-term outlook remains in limbo over the next 12 months. Recession fears in developed markets and reduced business profitability brought on by soaring inflation have put a damper on stock market returns. With markets pricing in rising interest rates, the upside potential of fixed income investments seems to be much more attractive. We advise clients to keep a moderately aggressive stance over the next 6 to 12 months. Periodically monitoring the very fluid conditions in the market is needed.
| 2023 Metrobank Forecast | 2024 Metrobank Forecast | |
|---|---|---|
|
GDP
|
6-7%
|
6-7%
|
|
Inflation
|
6-7%
|
4.5-5.5%
|
|
BSP Overnight Rate
|
6.0%
|
5.0%
|
|
USD/PHP Trend
|
55.1
|
54.4
|
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DISCLAIMER: The report above is circulated for general information only. The opinions expressed are solely those of the contributors and are based on prevailing market conditions and public sources that are believed to be reliable. Metrobank and the report contributors/support staff do not make any guarantees or representation as to the accuracy, completeness or suitability of this report. The report may contain confidential or legally privileged material and may not be copied, reshared, redistributed, or published without prior written consent. Opinions or strategies contained in this publication may change without prior notice and should not take the place of professional investment advice or sound judgment on the part of the reader.