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Peso GS Weekly: Demand anchors long-end recovery
Renewed buying interest drove yields lower, especially in the 10- and 20-year segments, as the market players shrugged off global headwinds
By Metrobank Local Currency Trading Department and Janssen Roman
What happened last week
After the mid-term election holiday, the government securities (GS) market opened to higher yields, following a global sell-off in US Treasuries. This prompted profit-taking in local bonds, particularly in the 10-year benchmark (10-73), which spiked to 6.24% before settling at 6.22%. Meanwhile, demand persisted for short-dated retail Treasury bonds (RTBs), with the 3-year paper trading just 2 basis points higher.
By mid-week, the Bureau of the Treasury’s dual-tranche auction met mixed results. While the 3-year (7-64) saw strong demand and printed 5 basis points below secondary levels, the 20-year (20-27) saw weaker reception and a wide yield dispersion, triggering de-risking. The 10-year sector underperformed, with yields on 10-73 and 25-6 climbing up to 7 basis points.
Despite overnight US Treasury weakness, the local market found support, closing mostly flat to slightly lower. Better buying emerged in the afternoon, lifting demand in 10-73 and 20-27. By week’s end, yields across the curve declined by 2.5 to 8 basis points, led by strong interest in the 7- to 10-year segment and 20-year bond.
BVAL Rates
| Tenor | 19-May-25 | 9-May-25 | Change |
|---|---|---|---|
| 1M | 5.45% | 5.25% | 0.20% |
| 3M | 5.51% | 5.52% | -0.01% |
| 6M | 5.63% | 5.67% | -0.04% |
| 1Y | 5.70% | 5.72% | -0.02% |
| 2Y | 5.76% | 5.76% | 0.00% |
| 3Y | 5.79% | 5.79% | 0.00% |
| 4Y | 5.83% | 5.82% | 0.01% |
| 5Y | 5.88% | 5.87% | 0.01% |
| 7Y | 6.01% | 5.98% | 0.03% |
| 10Y | 6.17% | 6.14% | 0.03% |
| 20Y | 6.27% | 6.25% | 0.02% |
| 25Y | 6.27% | 6.25% | 0.02% |
What we can expect
All eyes are on the reissuance of 10-73 this week, with strong demand expected near the 6.175% to 6.300% range. Investors are likely to remain active in the 8–10Y space, given the attractive yield pick-up. With no major local data due, price action will hinge on global sentiment, while expectations of rate cuts by the Bangko Sentral ng Pilipinas continue to lend support to longer-duration bonds.
Top GS Picks
| Security | Yield to Maturity | Tenor (Years) | Maturity |
|---|---|---|---|
| RTB 5-18 | 5.76% | 3.8 | 28-Feb-29 |
| FXTN 7-70 | 5.86% | 5.21 | 27-Jul-30 |
| FXTN 10-69 | 6.01% | 7.35 | 15-Sep-32 |
| FXTN 10-72 | 6.10% | 8.71 | 25-Jan-34 |
| FXTN 10-73 | 6.22% | 9.97 | 28-Apr-35 |
Note: Rates are indicative and subject to refresh.
(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)