Policy Rate Updates (September 21, 2023)
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Consensus Pricing – September 12, 2023
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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
- The 10-year US Treasury yield traded up to 4.566%, its highest level since 2007, following disappointing results on August home sales and consumer confidence.
- The US Senate is expected to vote on a stopgap funding bill that would extend the budget deadline to November 17. US House Speaker Kevin McCarthy said that he does not see support in Congress for the Senate’s plan, potentially bringing the US government closer to a shutdown.
- The Philippine government successfully auctioned its new Retail Dollar Bond (RDB) and raised USD 611.2 million at a coupon rate of 5.75%. The offer period will run from September 27 to October 6, with settlement on October 11.
- The House of Representatives approved on third and final reading the PHP 5.786 trillion national budget for 2024. This is 9.5% higher than the 2023 budget and is equivalent to 21.7% of the Philippines’ gross domestic product (GDP).
- Researchers at the Philippine Institute for Development Studies (PIDS) said that rejection of proposed tariff cuts on rice imports will only keep prices high. President Ferdinand Marcos Jr. rejected the proposal on September 26, citing projections that global rice prices are expected to fall.
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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
|
5.5%
|
6-7%
|
|
Inflation
|
6.0%
|
4.6%
|
|
Target BSP Overnight Rate
|
6.25%
|
5.50%
|
|
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.