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

Weekly Fixed Income Summary : June 25 – 29, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Pressure Build-up on Local Yields Outlook. Upward interest rate pressures are building up ahead of the June inflation data release on Thursday, which the Department of Finance (DoF) expects to clock in at 4.9% from 4.6% in May. Consensus is currently at 4.8%. If either of the forecasts are hit, it would be a new high for the year and... Read More

Weekly Fixed Income Summary : June 18 – 22, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Local Yields Soar on BSP Hike Outlook. We expect upward pressure on bond yields to persist this week following the Bangko Sentral’s (BSP) rate hike last week, the second this year which brought the policy rate to 3.5%. Consensus before the monetary board meeting was that the BSP will stand pat (but another hike sometime within the year was expected),... Read More

Weekly Fixed Income Summary : June 11 – 14, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Upward pressure on yields Outlook. Bond yields are expected to rise if the BSP raises its key policy rate in tomorrow’s meeting. But consensus expectation is that the Monetary Board (MB) will keep policy rates unchanged, digressing from the Fed’s hawkish tone set last week, citing easing inflation data in May. Despite recording a five-year high of 4.6%, inflation in... Read More

Weekly Fixed Income Summary : June 04 – 08, 2018

Weekly-Fixed-Income-Summary-and-Outlook
Will BSP Follow Second Fed Hike? Outlook. We expect bond yields to remain elevated this week ahead of the expected Fed hike this Thursday (PH time). U.S. inflation also accelerated in May by 2.8% year-on-year (YoY), the fastest pace in more than six years, reinforcing the Fed’s outlook for gradual interest rate hikes while eroding wage growth that remains subdued... Read More