Inflation settles at 2.5% despite food-price uptick
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Monthly Recap: GDP let down, US election, rate cuts all over
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Consensus Pricing – November 21, 2024
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The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
Your Morning Fix
- US stocks ended lower on Thursday, with UnitedHealth down sharply and technology shares easing as investors awaited the November non-farm payrolls data today.
- According to the Federal Reserve’s “Beige Book”, US economic activity has expanded slightly in most regions since early October, with employment growth “subdued” and inflation rising at a modest pace and businesses expressing optimism about the future.
- The Reserve Bank of India (RBI) is expected to hold its 6.50% key repurchase rate today, as October’s inflation surge beyond the 6% tolerance level has led economists to delay predicted rate cuts to early 2025.
- Philippine headline inflation quickened in November at 2.5% (aligned with consensus estimate), as prices of vegetables, meat and fish rose due to a series of typhoons
- SMC Tollways Corp. (SMCTC) listed its PHP 35-billion fixed-rate bond issuance at the Philippine Dealing & Exchange (PDEx) on Thursday. It was given a “PRS Aaa” with a stable outlook credit rating by the Philippine Rating Services Corp.
Our Portfolio Recommendation
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 |
CHART OF THE DAY
Chart of the Day
US jobless claims rise to 224,000
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
Featured Reports
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USD/PHP closes lower after weaker US data
- The USD/PHP exchange rate opened lower at 58.18 after weaker-than-expected US economic data releases overnight.
- Local inflation data, which was within consensus expectations, failed to garner a reaction, with markets tracking the dollar weakness seen in Dollar/Asian currency pairs.
- BSP comments on inflation risks caused another push lower to 58.07 ahead of the afternoon.
- USD/PHP ultimately closed at its low of 57.855, or around 37 centavos lower day-on-day, cementing a 1-peso drop for the week.
- Key supports below 57.80 are at 57.60 and 57.50, while resistance levels are at 58.00 and 58.10/15.
READ MORE
Peso GS yields move lower after CPI release
- GS yields opened relatively flat from previous levels on Wednesday, with R5-18 (4Y) trading at 5.94% at the onset as the much-awaited November CPI print came out in line with expectations at 2.50%.
- R5-18 traded down to 5.88%, while 20-27 (20Y) was seen trading at 6.03% as the slight move lower in global yields and the continued descent of the USD/PHP FX rate also helped boost risk-taking appetite.
- The benchmark bond 10-72 (9.1Y) outperformed the rest of the curve, trading down to a low of 5.84%, even ahead of the 10Y supply next week.
- At current levels, we remain better sellers of 10Y bonds close to the 5.85% area, given its inversion against belly securities in the 4-6Y space.
READ MORE
PSEi slips lower despite inflation printing within expectations
- The Philippine Stock Exchange index (PSEi) slightly slipped lower by 39.19 points to close at 6,690.77 despite after November inflation printing within expectations at 2.5% (vs October’s 2.3%).
- Foreign investors continued their selling streak, posting a net foreign outflow of PHP 468.0 million.
- Sectors ended mostly negative. Leading the decline was Services (-1.86%) followed by Property (-0.65%). Meanwhile, Holding Firms (+0.39%) slightly rose gains along with Mining & Oil (+0.17%).
- In corporate news, SM Supermalls, the retail leasing arm of SM Prime Holdings Inc., plans to open three new malls in Laoag, La Union, and Zamboanga City, while also redeveloping at least 10 existing malls, including the Mall of Asia and Megamall, in 2025, as part of its expansion strategy to enhance the consumer experience and meet evolving demands.
READ MORE
USD/PHP closes lower after weaker US data
- The USD/PHP exchange rate opened lower at 58.18 after weaker-than-expected US economic data releases overnight.
- Local inflation data, which was within consensus expectations, failed to garner a reaction, with markets tracking the dollar weakness seen in Dollar/Asian currency pairs.
- BSP comments on inflation risks caused another push lower to 58.07 ahead of the afternoon.
- USD/PHP ultimately closed at its low of 57.855, or around 37 centavos lower day-on-day, cementing a 1-peso drop for the week.
- Key supports below 57.80 are at 57.60 and 57.50, while resistance levels are at 58.00 and 58.10/15.
READ MORE
Peso GS yields move lower after CPI release
- GS yields opened relatively flat from previous levels on Wednesday, with R5-18 (4Y) trading at 5.94% at the onset as the much-awaited November CPI print came out in line with expectations at 2.50%.
- R5-18 traded down to 5.88%, while 20-27 (20Y) was seen trading at 6.03% as the slight move lower in global yields and the continued descent of the USD/PHP FX rate also helped boost risk-taking appetite.
- The benchmark bond 10-72 (9.1Y) outperformed the rest of the curve, trading down to a low of 5.84%, even ahead of the 10Y supply next week.
- At current levels, we remain better sellers of 10Y bonds close to the 5.85% area, given its inversion against belly securities in the 4-6Y space.
READ MORE
PSEi slips lower despite inflation printing within expectations
- The Philippine Stock Exchange index (PSEi) slightly slipped lower by 39.19 points to close at 6,690.77 despite after November inflation printing within expectations at 2.5% (vs October’s 2.3%).
- Foreign investors continued their selling streak, posting a net foreign outflow of PHP 468.0 million.
- Sectors ended mostly negative. Leading the decline was Services (-1.86%) followed by Property (-0.65%). Meanwhile, Holding Firms (+0.39%) slightly rose gains along with Mining & Oil (+0.17%).
- In corporate news, SM Supermalls, the retail leasing arm of SM Prime Holdings Inc., plans to open three new malls in Laoag, La Union, and Zamboanga City, while also redeveloping at least 10 existing malls, including the Mall of Asia and Megamall, in 2025, as part of its expansion strategy to enhance the consumer experience and meet evolving demands.
READ MORE