The yields of public securities traded on the secondary market dropped in a widespread manner, as expectations of cuts in the rates of the US Federal Reserve and Bangko Sentral n Pilipinas (BSP) were maintained.
On average, GS yields were reduced by 7.3 basis points (bp) per week per week, according to the Bloomberg PHP Rating Service (BVAL) rates published on June 28 on the Philippine Dealing website System.
"The performance of the GS operations continued to decline, following the general hope that the Fed could reduce the policy rates since July. The yields of global bonds led by the 10-year US Treasury have declined, with the good locals following this movement, "said Nicholas Antonio T. Map, senior economist at ING Bank NV-Manila Branch in an email.
"Expectations for a slower inflation rate for the month of June and the lowest loan from the Treasury Office (BTr) also contributed to the downward pressure on the rates," said Mr. Map.
In a separate e-mail message, a good dealer shared the same opinion: "Local yields fell [last] Weeks due to the growing market sentiment of a central banking policy orientation worldwide, mainly from the Fed and the BSP. "
The trader noted that his own feeling among traders remained after the BSP revised the inflation forecast during the meeting of the June 20 monetary meeting. The merchant also cited the comment by Deputy Deputy Governor Diwa G. Guinigundo, from BSP, that there is still room for monetary policy that favors the expectation that inflation will continue its downward trend, despite the fact that it is increased the pace in May.
At the meeting of its Monetary Board, the BSP reduced the projection of inflation to 2.7% for this year of 2.9% foreseen in May and to 3% of 3.1% for 2020.
Meanwhile, on Friday, the Economics Department of BSP pointed out that inflation probably had been set in the range of 2.2-3% last month amid low prices for rice and domestic oil, along with a downward adjustment of electricity rates and appreciation of the weight.
The upper end of the June budget of BSP is compared to real impressions of May of 3.2%, which broke the six consecutive months of slowdown from September to the end of October of 6.7%. Meanwhile, the level of the BSP estimate would be the slowest from 2.1% in November 2016, while the limit will be the slowest from 2.9% in December 2017.
Analysts pointed out that the longest end of the profit curve moved last week.
"The yields reacted to the second half of the loan program with the BTr aimed at longer bonds to emit given the perspective of inflation," Mr. said. Map, ING.
"During the week, great movements were observed in the end of the long-term performance curve, as investors followed closely the indications about the possible outcome of the US-China trade talks during the G's summit -20. [last] Weekend, "said the bond operator.
The merchant added that external developments caused local yields to decline last week.
"The yields were initially reduced as the geopolitical tensions between the U.S. and Iran increased after the imposition of US sanctions on the latter. However, towards the end of the week, yields go recovering due to increased appetite by some positive business advances before the G20 summit … during which the United States and China came to a consensus about their current trade disputes, "the merchant said.
The treasury bills (bill) extended in a generalized manner for the 91-day debt papers that produced 4.46%, a decrease of 10.7 basis points compared to the previous week's level. Law titles of 182 days and 364 days dropped 7.9 basis points and 6 basis points to obtain 4.76% and 4.97%, respectively.
They also fell good on the belly of the curve. Treasury bonds of two, three and four years (T-bond) were quoted at 4.95%, 4.96% and 4.98%, 5.6 basis points, 5.2 basis points, and 4.9 basics, respectively. In the same way, five, seven and ten years' work was 5%, 5.04% and 5.07%, which were 4.6 basic points, 5 basic points and 5.3 basic points the week by week.
The yields of long-term debt documents were also reduced, while equipment bonds of 20 and 25 years were 5.18% and 5.13%, a decrease of 9.8 basis points and 15 points Basics, respectively, compared to the previous week.
For this week, the goodwill trader said that GS's yields will continue to decline, "as the likely soft report on inflation in the Philippines could bolster the views of more cuts in BSP rates this year."
"The US economic reports on manufacturing and services, probably weak, could also decrease yields, since in July 2019 bets of a reduction in the rate of the Federal Reserve of the United States were fueled."
For Mr. Map of ING Bank, "[The] The market will probably come close to the G-20 result, especially [Presidents’] Trump-Xi meeting for management, while also looking at local inflation for management. "- Carmina Angelica V. Olano