Weekly Fixed Income Summary : September 10 – September 14, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Rate Hikes Ahead Outlook. Indications in the bid rates of the Bureau of the Treasury’s (BTr) auctions and in the secondary market show that the market is already pricing in a 50-bp hike next week. The latest 10-yr auction, which was fully-rejected, had an average bid rate of 7.64%, almost a full percentage point higher than the last done rate... Read More

Weekly Fixed Income Summary : September 3 – September 7, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Bracing for Another 50-bp Hike Outlook. Expectations of a hike by the Bangko Sentral ng Pilipinas (BSP) in its next monetary board meeting this month are rising as inflation and expectations are peaking. August inflation of 6.4% exceeded both BSP estimate of 5.9% and target range of 5.5%-6.2% and even analysts’ expectation of 6.0%. Year-to-date, inflation is at 4.8%. Following... Read More

Weekly Fixed Income Summary : August 27 – August 31, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Peaking Inflation Outlook. There is significant upward pressure on bond yields as inflation expectations peak this quarter and concerns of further escalation of US-China trade dispute. The Bangko Sentral (BSP) expects inflation to hit 5.9% last August and cited a range of 5.5%-6.2%, which would be the highest this year and in a decade and would bring the year-to-date average... Read More

Weekly Fixed Income Summary : August 20 – August 24, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Fed Hikes Loom Outlook. We expect the yield curve to be rangebound with an upward bias ahead of the expected Fed hike during its next meeting this September 25-26. Odds raised to 96% from 88% following the release of minutes from the last Fed meeting. The minutes also noted that while the US labor market remains strong, potential trade disputes,... Read More

Weekly Fixed Income Summary : August 06 – August 10, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Breakout Inflation Amid Slowdown Outlook. A much slower-than-expected GDP growth of 6.0% in the past quarter rained on the parade of a 50-bp rate hike last week. Peaking inflation slowed private consumption, 73% of gross domestic product, to just 5.6% growth from 5.7% in the first quarter and spoiled the 20.7% growth in investments (from 12.4% in Q1). The 2Q... Read More

Weekly Fixed Income Summary : July 30 – August 03, 2018

Weekly-Fixed-Income-Summary-and-Outlook
July Inflation Cements August BSP Hike Outlook. There is strong upward bias on the yield curve as July inflation clocked in at 5.7%, beating consensus expectation of 5.5%, near the top-end of the Bangko Sentral’s (BSP) forecast range of 5.1%-5.8%, higher than June’s 5.2%, and a five-year high. Food and non-alcoholic beverages led the growth at 7.1%. The high figure... Read More

Weekly Fixed Income Summary : July 23 – 27, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Accelerating Inflation Outlook. Expectations of 1) a Bangko Sentral ng Pilipinas (BSP) rate hike in August spurred by rising inflation expectations, and; 2) faster US economic growth in the past quarter drove local benchmark yields higher by an average of 11bps last week. The BSP expects July inflation to rise between 5.1%-5.8%, higher than June’s 5.2% and the Department of... Read More

Weekly Fixed Income Summary : July 16 – 20, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Fifty Basis Point-Hike Likely Outlook. Affirmation of the Philippines’ credit rating and outlook from Moody’s, Fitch, and S&P provided a brief respite for bond investors after weeks of local and global economic and geopolitical uncertainty. Both Moody’s and Fitch maintained the country’s BBB/Baa2 rating – a notch above investment grade – while maintaining a stable outlook. Meanwhile, S&P upgraded its... Read More

Weekly Fixed Income Summary : July 09 – 13, 2018

Weekly-Fixed-Income-Summary-and-Outlook
The Cost of Federalism Outlook. Global geopolitical and local political noise put investors on the defensive and will keep the yield curve elevated in the near-term. Ongoing discussions about a shift to federalism is getting more traction, but economists and analysts are warning about the ill-effects of the shift to the economy. Fiscal deficit to GDP ratio is estimated to... Read More

Weekly Fixed Income Summary : July 02 – 06, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Defensive Bond Market Outlook. Investors and traders alike are defensive amid brewing local economic and geopolitical changes: (1) the shift to federalism gains traction as President Duterte endorses the consultative committee’s draft of the constitution; (2) faster-than-expected inflation last June of 5.2%, which analysts expect to peak in the third quarter; and (3) higher government borrowing. The national government is... Read More