Peso GS Weekly: Local yields expected to move sideways
All eyes are on the 3-year bond auction of the Bureau of the Treasury.
WHAT HAPPENED LAST WEEK
The local government securities (GS) yields moved relatively flat for the better part of last week given the absence of fresh market-moving catalysts both in the local and global front.
On Wednesday, the Bureau of the Treasury fully awarded the reissuance of the 20-Year Fixed Rate Treasury Note (FXTN) 20-27 at an average of 6.198%, with accepted yields ranging from 6.174% to 6.22%, or just within market indications.
The auction’s lackluster reception failed to provide any substantial move as players continued to remain on the sidelines. The 20-Year benchmark eventually traded up to 5 basis points (bps) higher from its auction average, closing at 6.23% amid weak risk-taking appetite.
Benchmark bonds, such as the 5-Year Retail Treasury Bond 5-18 and the 10-Year FXTN 10-72, closed around 2 to 4 bps higher week-on-week at 6.05% and 6.06%, respectively. Elsewhere, institutional names continued to be opportunistic buyers, capitalizing on sell-offs and positioning ahead of the BSP’s anticipated easing cycle.
Market Levels (week-on-week)
WHAT WE CAN EXPECT
All eyes are on today’s 3-Year auction, with the desk’s indicative range for the reissuance of the 3-Year FXTN 20-14 still at 5.975-6.100%. GS yields are expected to move sideways, tracking global yield movements as market participants await Thursday’s August Consumer Price Index release. The current Bloomberg consensus for the CPI stands at 3.6%, aligning with the BSP’s forecast range of 3.2-4.0%.
See our top picks below:
Note: Rates are indicative and subject to refresh.