Government Securities
Last week’s 91- and 182- day T-Bill average yields fell amidst strong demand in the auction, as investors looked for “short-term investments where they can temporarily park their funds,” according to the National Treasurer. Average yields for the 91- and 182-day bills fetched 1.495% (- 30.5 bps) and 1.795% (- 32.2 bps), while 364-day bills dropped 14.3 bps to 2.422%. Total tenders for the partially awarded auction amounted to P21.30 billion. The BTr capped the awards for 364-day bills at P3.6 billion, as it issued a total of P7.1 billion worth of short-term debt out of the P7.5 billion offer.
Last week’s 91- and 182- day T-Bill average yields fell amidst strong demand in the auction, as investors looked for “short-term investments where they can temporarily park their funds,” according to the National Treasurer. Average yields for the 91- and 182-day bills fetched 1.495% (- 30.5 bps) and 1.795% (- 32.2 bps), while 364-day bills dropped 14.3 bps to 2.422%. Total tenders for the partially awarded auction amounted to P21.30 billion. The BTr capped the awards for 364-day bills at P3.6 billion, as it issued a total of P7.1 billion worth of short-term debt out of the P7.5 billion offer.
With the workweek cut short by the monsoon rains and metro-wide flooding, trading volumes were relatively light the entire week. News of higher inflation in July 2012 and price-driven pressures brought about the massive flooding dampened the market’s mood, resulting into a gradual climb in secondary market rates towards the end of the week. Yields for the 19-year FXTN 20-17 rose to 5.60% from 5.535% at the start of the week. Likewise, the 20-year RTB 20-1 gained 8 bps to cap the week at 5.675%.
Higher long-term GS yields resulted in a steeper yield curve, as the difference between 2- and 20-year debt increased to 309 bps from 300 bps the week earlier. Trading volume for the week fell to P44,716.11 million from P109,787.83 million.
Foreign Exchange
With financial markets closed on Tuesday, market players sold some of their accumulated U.S. Dollar positions, resulting in a P0.065 appreciation for the Peso (P41.77). The local currency capped the week marginally weaker against the Dollar, as slower-than-expected Chinese exports growth stoked risk aversion (P41.885 -0.125). Total weekly volume for the USD-PHP spot market amounted to $2,945.66 million.
Stock Market
The PSEi surrendered 52.06 points (5,256.61) on Thursday, on “sluggish trading” and the perceived negative effects of the monsoon-induced flooding. The main index closed the week at 5,263.35 (+ 6.74). Total weekly volume amounted to P20.59 billion.
Rates Forecast
The coupon rate for next Tuesday’s 25-year Treasury Bond could range from 5.75% - 5.875%, as yields react to renewed inflation concerns. Last Friday’s 25-year PDST-R2 stood at 5.80%. Demand for the long dated paper is expected to be large, since most of the market appetite is centered on the longer end of the curve.
Expect the secondary market to trade sideways with an upward bias, should inflation worries over the near-term prevail.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
Higher long-term GS yields resulted in a steeper yield curve, as the difference between 2- and 20-year debt increased to 309 bps from 300 bps the week earlier. Trading volume for the week fell to P44,716.11 million from P109,787.83 million.
Foreign Exchange
With financial markets closed on Tuesday, market players sold some of their accumulated U.S. Dollar positions, resulting in a P0.065 appreciation for the Peso (P41.77). The local currency capped the week marginally weaker against the Dollar, as slower-than-expected Chinese exports growth stoked risk aversion (P41.885 -0.125). Total weekly volume for the USD-PHP spot market amounted to $2,945.66 million.
Stock Market
The PSEi surrendered 52.06 points (5,256.61) on Thursday, on “sluggish trading” and the perceived negative effects of the monsoon-induced flooding. The main index closed the week at 5,263.35 (+ 6.74). Total weekly volume amounted to P20.59 billion.
Rates Forecast
The coupon rate for next Tuesday’s 25-year Treasury Bond could range from 5.75% - 5.875%, as yields react to renewed inflation concerns. Last Friday’s 25-year PDST-R2 stood at 5.80%. Demand for the long dated paper is expected to be large, since most of the market appetite is centered on the longer end of the curve.
Expect the secondary market to trade sideways with an upward bias, should inflation worries over the near-term prevail.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
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