Monthly Recap: BSP to outpace the Fed in rate cuts
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Quarterly Economic Growth Release: 5.4% Q12025
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Policy rate views: Uncertainty stalls cuts
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The Gist
A daily dose of market updates and smart investment strategies to guide your portfolio decisions
Today's Report
MORNING FIX
- The Philippines is set to finalize its first free trade agreement with the United Arab Emirates next month, aiming to boost investments from UAE sovereign wealth funds, according to the President’s Special Envoy to the UAE for Trade and Investment Ceferino S. Rodolfo.
- The Philippine government recorded a fiscal surplus of PHP 67.3 billion in April, reversing the PHP 375.73-billion deficit in March, according to the Bureau of the Treasury. This marks the first budget surplus since January and represents a 57.51% increase from April 2024.
- According to the Department of Agriculture, the Philippines imported 4.8 million metric tons of rice in 2024, generating PHP 34.23 billion in tariffs, a 12.57% increase. Tariff collections surged in early 2024 but dropped significantly in the latter half.
- The Manhattan-based Court of International Trade ruled that President Donald Trump exceeded his authority by imposing tariffs on nations with trade imbalances, blocking them from taking effect.
- BOJ Governor Kazuo Ueda warned that large swings in super-long bond yields could impact shorter-term rates and economic growth. His remarks highlight the central bank’s focus on yield volatility amid ongoing trade policy uncertainty and upcoming discussions on bond tapering.
Our Portfolio Recommendation
Our peso portfolio remains at a neutral stance of 50% fixed income and 50% equities as the BSP becomes increasingly accommodative. However, we remain cautious amid global uncertainties. The sustainability of the current bounce in local equities remains in contention, largely influenced by geopolitical jitters and cautious sentiment, as opposed to fundamentals. As for the dollar portfolio, we are shifting our global strategy back to 50% fixed income and 50% equities from the previous 60%/40% allocation because of easing US-China trade tensions. However, there is lingering uncertainty and we prefer to remain defensive despite the shift in risk sentiment.
| 2025 Metrobank Forecast | 2026 Metrobank Forecast | 2027-2029 Metrobank Forecast | |
|---|---|---|---|
| GDP | 5.7% | 6.1% | 6.0% |
| Inflation | 2.2% | 3.3% | 3.0% |
| BSP Target Reverse Repurchase Rate | 4.75% | 4.25% | 5.00% |
| Federal Funds Rate | 4.00% | 3.50% | 4.00% |
| USD/PHP | 56.9 | 57.7 | 55.0 |
CHART OF THE DAY
Chart of the Day
New orders for US goods slump amid tariff uncertainty
According to the US Department of Commerce, core capital goods orders fell 1.3% in April, their steepest decline since October, while durable goods orders dropped 6.3%. First quarter orders were boosted by impending tariffs as businesses front-loaded equipment purchases to avoid elevated prices. However, uncertainty over shifting trade policies likely led to the slowdown in new orders in April. Although President Donald Trump’s temporary tariff reductions on Chinese goods and his delay of most import duties supported consumer confidence, concerns about rising costs and economic impacts persist. Sources: Bloomberg, Reuters
Featured Reports
More Reads
USD/PHP grinds lower amid fading interest
- The USD/PHP exchange rate opened 1 centavo lower at 55.55 on Wednesday, before dealer-driven demand pushed the pair to highs of 55.64.
- Fading interest emerged at this level, with suspected offshore supply scaling in.
- A choppy grind lower stalled ahead of 55.50 as liquidity thinned out heading into the afternoon.
- The USD/PHP exchange rate ultimately closed at 55.475, or 8.5 centavos lower day-on-day.
- The current support levels of USD/PHP are at 55.30/40 while the resistance levels are at 55.60/7
READ MORE
Local GS trading rebounds with better interest
- Trading volume of local government securities (GS) rebounded to PHP 50.9 billion on Wednesday, higher than recent sessions, reflecting stronger two-way interest.
- Local yields held steady, with most benchmark bonds ending unchanged to 1 basis point (bp) higher.
- 14-year Fixed Rate Treasury Note (FXTN) 20-23 continued to attract demand, trading around 6.480%, just 0.5 bp higher than its auction average.
- 7-year FXTN 10-69 trades 20 bps higher than 5-year FXTN 7-70, offering strong relative value.
- No major local catalysts are expected for the rest of the week, leaving the local GS market to follow movements in global bond markets.
READ MORE
Positive sentiment keeps PSEi at the 6,400-handle
- The Philippine Stock Exchange index (PSEi) ended 41.18 points higher at 6,425.80 on Wednesday, reflecting slowly recovering investor sentiment.
- Financials (+1.46%) and Services (+0.77%) paced the day’s sectoral gainers.
- Alliance Global Group Inc. (+3.60%), Converge Information & Communications Technology Solutions Inc. (+3.44%) and JG Summit Holdings Inc. (+2.35%) anchored the index’s climb.
- Meanwhile, Century Pacific Foods Inc. (-3.78%), PLDT Inc. (-1.56%), and Ayala Corp. (-1.46%) weighed on the session’s performance.
- Investor sentiment was lifted by the sharp rally on Wall Street overnight, following the temporary postponement of the US-EU tariff hike and a solid reading in US consumer confidence.
READ MORE
USD/PHP grinds lower amid fading interest
- The USD/PHP exchange rate opened 1 centavo lower at 55.55 on Wednesday, before dealer-driven demand pushed the pair to highs of 55.64.
- Fading interest emerged at this level, with suspected offshore supply scaling in.
- A choppy grind lower stalled ahead of 55.50 as liquidity thinned out heading into the afternoon.
- The USD/PHP exchange rate ultimately closed at 55.475, or 8.5 centavos lower day-on-day.
- The current support levels of USD/PHP are at 55.30/40 while the resistance levels are at 55.60/7
READ MORE
Local GS trading rebounds with better interest
- Trading volume of local government securities (GS) rebounded to PHP 50.9 billion on Wednesday, higher than recent sessions, reflecting stronger two-way interest.
- Local yields held steady, with most benchmark bonds ending unchanged to 1 basis point (bp) higher.
- 14-year Fixed Rate Treasury Note (FXTN) 20-23 continued to attract demand, trading around 6.480%, just 0.5 bp higher than its auction average.
- 7-year FXTN 10-69 trades 20 bps higher than 5-year FXTN 7-70, offering strong relative value.
- No major local catalysts are expected for the rest of the week, leaving the local GS market to follow movements in global bond markets.
READ MORE
Positive sentiment keeps PSEi at the 6,400-handle
- The Philippine Stock Exchange index (PSEi) ended 41.18 points higher at 6,425.80 on Wednesday, reflecting slowly recovering investor sentiment.
- Financials (+1.46%) and Services (+0.77%) paced the day’s sectoral gainers.
- Alliance Global Group Inc. (+3.60%), Converge Information & Communications Technology Solutions Inc. (+3.44%) and JG Summit Holdings Inc. (+2.35%) anchored the index’s climb.
- Meanwhile, Century Pacific Foods Inc. (-3.78%), PLDT Inc. (-1.56%), and Ayala Corp. (-1.46%) weighed on the session’s performance.
- Investor sentiment was lifted by the sharp rally on Wall Street overnight, following the temporary postponement of the US-EU tariff hike and a solid reading in US consumer confidence.
READ MORE