Government Securities
The Bureau of Treasury (BTr) rejected all the bids for the Treasury Bill auction last Monday. Again, market interest was on the longer end of the curve. Total tenders for the P7.5 billion offer amounted to only P6.51 billion, the lowest tally of bids this quarter. Out of the programmed P52.50 billion in T-Bill borrowings this quarter, the BTr has issued only P22.90 billion.
Stressed out? Click here to learn more about this week's Track Beauty, Kristi Castlin
Local GS yields inched lower on Monday, on news of a $125 billion credit line to Spanish banks and indications of lower third quarter local borrowings by the BTr. Secondary market rates climbed gradually in the coming days. Foreign news contributed to the somewhat dour local market sentiment, amidst (1) Moody’s credit downgrades of Spain and Cyprus, (2) the upcoming Greek elections, and (3) weaker U.S. retail sales data. The Monetary Board kept benchmark policy rates unchanged, but revised the 2012 inflation forecast a tad higher to 3.10% from 3.07%.
The Bureau of Treasury (BTr) rejected all the bids for the Treasury Bill auction last Monday. Again, market interest was on the longer end of the curve. Total tenders for the P7.5 billion offer amounted to only P6.51 billion, the lowest tally of bids this quarter. Out of the programmed P52.50 billion in T-Bill borrowings this quarter, the BTr has issued only P22.90 billion.
Stressed out? Click here to learn more about this week's Track Beauty, Kristi Castlin
Local GS yields inched lower on Monday, on news of a $125 billion credit line to Spanish banks and indications of lower third quarter local borrowings by the BTr. Secondary market rates climbed gradually in the coming days. Foreign news contributed to the somewhat dour local market sentiment, amidst (1) Moody’s credit downgrades of Spain and Cyprus, (2) the upcoming Greek elections, and (3) weaker U.S. retail sales data. The Monetary Board kept benchmark policy rates unchanged, but revised the 2012 inflation forecast a tad higher to 3.10% from 3.07%.
The 19-year FXTN 20-17, the most actively traded security, rose from a low of 5.9175% on Monday to 6% on Friday morning.
Trading volume for the week slowed to P32.308 billion, down from the P81.225 billion the previous week.
Foreign Exchange
USD-PHP spot market trading favored the Philippine Peso, amidst the $125 billion credit line to Spanish banks, expectations of another round of quantitative easing in the U.S., and the 7.6% increase in April 2012 exports. The improvement in export figures, as well accumulated remittances flows over the Independence Day break, enabled the Peso to buck the general weakness arising from the downgrade of Spain’s credit rating. From P42.92 (+ 0.35) on Monday, the local currency closed the week at P42.260 (+ 0.31), gaining a total of P1.01. Total weekly volume for the USD-PHP spot market amounted to $4,324.98 million.
Stock Market
Likewise, the PSEi gained a total of 115.14 points in the first two days of trading, closing at 5,109.61 (+ 33.76) on Wednesday. The main index dove 88.76 points to 5,020.85 on Thursday, as Spanish sovereign debt neared junk bond status. Despite early gains on talks of another U.S. stimulus package, the PSEi retreated by 90.22 points (4,930.63) on Friday afternoon, on foreign driven selling ahead of next week’s pivotal Greek elections. Total weekly volume for the PSEi amounted to P45.29 billion.
Rates Forecast
Unless something positive comes out of the Greek elections, expect rates for this Tuesday’s 20-year Treasury Bond re-issue to range from 5.95% to 6.10%. In light of the dire foreign climate and the illiquid nature of FXTN 20-17, dealers could submit defensive bids; hence, meriting another rejection by the BTr. As points of reference, the PDST-F yield of FXTN 20-18 was at 6.1259% on Friday. The security last fetched 5.94% in the secondary market.
The government’s budget data will be released on 22 June 2012. The government’s relatively sound fiscal position could temper the sentiment-driven bears in the GS market.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
Trading volume for the week slowed to P32.308 billion, down from the P81.225 billion the previous week.
Foreign Exchange
USD-PHP spot market trading favored the Philippine Peso, amidst the $125 billion credit line to Spanish banks, expectations of another round of quantitative easing in the U.S., and the 7.6% increase in April 2012 exports. The improvement in export figures, as well accumulated remittances flows over the Independence Day break, enabled the Peso to buck the general weakness arising from the downgrade of Spain’s credit rating. From P42.92 (+ 0.35) on Monday, the local currency closed the week at P42.260 (+ 0.31), gaining a total of P1.01. Total weekly volume for the USD-PHP spot market amounted to $4,324.98 million.
Stock Market
Likewise, the PSEi gained a total of 115.14 points in the first two days of trading, closing at 5,109.61 (+ 33.76) on Wednesday. The main index dove 88.76 points to 5,020.85 on Thursday, as Spanish sovereign debt neared junk bond status. Despite early gains on talks of another U.S. stimulus package, the PSEi retreated by 90.22 points (4,930.63) on Friday afternoon, on foreign driven selling ahead of next week’s pivotal Greek elections. Total weekly volume for the PSEi amounted to P45.29 billion.
Rates Forecast
Unless something positive comes out of the Greek elections, expect rates for this Tuesday’s 20-year Treasury Bond re-issue to range from 5.95% to 6.10%. In light of the dire foreign climate and the illiquid nature of FXTN 20-17, dealers could submit defensive bids; hence, meriting another rejection by the BTr. As points of reference, the PDST-F yield of FXTN 20-18 was at 6.1259% on Friday. The security last fetched 5.94% in the secondary market.
The government’s budget data will be released on 22 June 2012. The government’s relatively sound fiscal position could temper the sentiment-driven bears in the GS market.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
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