Government Securities
Yields for last Tuesday’s 10-year Treasury Bond auction stayed within market expectations. The new issue fetched a coupon rate of 4.75%, with the Bureau of Treasury awarding the full P9.0 billion allocation. Total tenders amounted to P44.155 billion, the largest since January 2012. A liquid market and expectations of monetary stimulus abroad fueled the strong demand.
Market players continued to buy securities at the 7- to 10-year tenors, in anticipation of the upcoming bond swap in the fourth quarter of the year. The BTr is set to issue new 5-, 7-, 10-, 15-, 20-, and 25-year tenors in huge amounts (total of at least P300 billion). Doing so would create liquidity in the aforesaid tenors. Since the 7- to 10-year tenors have seen little movement the past months, proprietary traders have realized value in these securities.
The 20-year FXTN 20-17 traded sideways with an upward bias, trading at 5.565% to 5.615% the entire week. The 10-year FXTNs, fell by 8 bps, on average, as 7-year papers dipped by 7 bps. There were hardly any surprises in terms of policy moves last week, as the Monetary Board kept benchmark rates unchanged and revised the 2012 and 2013 inflation forecasts higher – but still within the 3-5% target.
In light of the renewed market interest in the aforesaid tenors, the yield curve was flatter when comparing 2- and 10-year debt (224 bps from 232 bps) and 5- and 10-year securities (0.364 bps from 0.495 bps). Total weekly volume for the secondary GS market amounted to P122.16 billion.
Foreign Exchange
Monetary easing in Europe and in the United States bolstered emerging market currencies and assets. The prospect of lower interest rates in the developed world makes higher-yielding emerging market a more attractive destination for capital flows. Hence, the Peso reached consecutive 4-year highs last week against the U.S. Dollar. The local currency capped the week at P41.42 (+ 0.33) versus the greenback, gaining a total of P0.26 in five days of trading. Total weekly volume for the USD-PHP spot market amounted to $4,506.05 million.
Stock Market
Likewise, the local equities market benefited from the developments abroad. The PSEi surged by a total of 121.15 points last week, closing at 5,322.47 (+ 81.97) on Friday. Total weekly volume amounted to P27.33 billion.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
Yields for last Tuesday’s 10-year Treasury Bond auction stayed within market expectations. The new issue fetched a coupon rate of 4.75%, with the Bureau of Treasury awarding the full P9.0 billion allocation. Total tenders amounted to P44.155 billion, the largest since January 2012. A liquid market and expectations of monetary stimulus abroad fueled the strong demand.
Market players continued to buy securities at the 7- to 10-year tenors, in anticipation of the upcoming bond swap in the fourth quarter of the year. The BTr is set to issue new 5-, 7-, 10-, 15-, 20-, and 25-year tenors in huge amounts (total of at least P300 billion). Doing so would create liquidity in the aforesaid tenors. Since the 7- to 10-year tenors have seen little movement the past months, proprietary traders have realized value in these securities.
The 20-year FXTN 20-17 traded sideways with an upward bias, trading at 5.565% to 5.615% the entire week. The 10-year FXTNs, fell by 8 bps, on average, as 7-year papers dipped by 7 bps. There were hardly any surprises in terms of policy moves last week, as the Monetary Board kept benchmark rates unchanged and revised the 2012 and 2013 inflation forecasts higher – but still within the 3-5% target.
In light of the renewed market interest in the aforesaid tenors, the yield curve was flatter when comparing 2- and 10-year debt (224 bps from 232 bps) and 5- and 10-year securities (0.364 bps from 0.495 bps). Total weekly volume for the secondary GS market amounted to P122.16 billion.
Foreign Exchange
Monetary easing in Europe and in the United States bolstered emerging market currencies and assets. The prospect of lower interest rates in the developed world makes higher-yielding emerging market a more attractive destination for capital flows. Hence, the Peso reached consecutive 4-year highs last week against the U.S. Dollar. The local currency capped the week at P41.42 (+ 0.33) versus the greenback, gaining a total of P0.26 in five days of trading. Total weekly volume for the USD-PHP spot market amounted to $4,506.05 million.
Stock Market
Likewise, the local equities market benefited from the developments abroad. The PSEi surged by a total of 121.15 points last week, closing at 5,322.47 (+ 81.97) on Friday. Total weekly volume amounted to P27.33 billion.
Sources: Business World, PDEX, Philippine Daily Inquirer, Bloomberg
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