Policy Rate Updates: BSP chooses baby steps once more
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Inflation Update: Price-rise slips to 1.8% in March, green light for BSP’s rate cut
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Monthly Economic Update: Green light for easing?
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Your Morning Fix
- Government infrastructure spending surged by 23.1% in the first two months of 2025, reaching PHP 148.3 billion, as the administration accelerated disbursements ahead of the election ban.
- The Philippine Statistics Authority (PSA) reported that price growth in Metro Manila dropped to a 58-month low in March, with the general retail price index (GRPI) slowing to 1.1% year-on-year, down from 1.3% in February and 2.1% a year ago.
- The government fully awarded its planned PHP 25 billion in Treasury bills on Monday amid strong demand, with total bids reaching PHP 80.265 billion—over three times the offered amount.
- The Philippine government aims for a favorable trade agreement with the United States as officials head to Washington on April 29 to negotiate the 17% reciprocal tariff imposed by the Trump administration.
- Chinese officials sought to ease concerns over US tariffs impacting economic recovery, with the head of the National Development and Reform Commission Zhao Chenxin, expressing confidence in China’s 5% growth target for 2025 while emphasizing a steady focus on development goals.
Our Portfolio Recommendation
For the peso portfolio, we recommend a neutral 50-50 split between fixed income and equities. While the Bangko Sentral ng Pilipinas and US Fed rate cuts support risk assets, potential headwinds from tariffs and market volatility may call for a balanced approach to capture fixed income gains while maintaining equity exposure. In the dollar portfolio, we are adjusting our earlier guidance for 2Q 2025. We recommend a shift to 60% fixed income and 40% equities, reflecting a more defensive stance. This revision considers the potential downgrade in growth and earnings outlook following the recently announced reciprocal tariffs.
| 2025 Metrobank Forecast | 2026 Metrobank Forecast | 2027-2029 Metrobank Forecast | |
|---|---|---|---|
| GDP | 6.2% | 6.2% | 6.0% |
| Inflation | 3.2% | 3.0% | 3.0% |
| BSP Target Reverse Repurchase Rate | 5.00% | 4.25% | 5.00% |
| Federal Funds Rate | 3.75% | 3.00% | 4.00% |
| USD/PHP | 57.9 | 56.5 | 55.0 |
CHART OF THE DAY
Chart of the Day
Gold shines ahead of economic data releases
Gold continued to rally as the value of the dollar decreased and bond yields fell, with investors eagerly awaiting key economic reports on employment, inflation, and economic expansion due out later this week. These reports are expected to provide clarity on the impact of US President Donald Trump’s trade war. So far this year, gold has seen a significant increase of over 25% as investors seek safe investments amid global economic worries and the President’s assertive trade policies. This rise has been further supported by money flowing into gold-backed funds and central bank acquisitions. Source: Bloomberg
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USD/PHP closes higher amid dollar recovery
- The USD/PHP exchange rate opened 1.5 centavos higher at 56.28 on Monday, tracking the dollar recovery overnight.
- The local pair was initially well sold, but fixing demand dragged the pair back towards the 56.30 area.
- A further 15-centavo rally to highs of 56.47 followed, but suspected local supply tempered the upward momentum.
- The USD/PHP exchange rate ultimately closed at 56.42, or 15.5 centavos higher day-on-day.
- The current support levels of USD/PHP are at 56.00/20 while the resistance levels are at 56.50/70.
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Local GS players focus on the new 10Y bond
- The local government securities (GS) market saw most activity focused on the newly issued 10-year bond, Fixed Rate Treasury Note (FXTN) 10-73.
- FXTN 10-73 remains attractive, offering a solid yield premium over nearby securities such as FXTN 10-72.
- Selling interest from local players briefly pushed FXTN 10-73’s yield up to 6.38%, but buying interest helped it close at 6.3725%.
- Other benchmark bonds were muted, ending within 1.5 basis points of last week’s levels.
- Market attention now shifts to today’s reissuance of the 5-year FXTN 7-70.
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PSEi drops amid mixed Asian market performances
- The Philippine Stock Exchange index (PSEi) ended 19.25 points lower at 6,249.50 on Monday, amid mixed performances in Asian markets and slightly lower US futures.
- Index leaders were Bloomberry Resorts Corp. (+10.28%), Emperador Inc. (+4.67%), Ayala Corp. (+3.16%), International Container Terminal Services Inc. (+2.86%), and SM Prime Holdings Inc. (+1.75%).
- Meanwhile, BDO Unibank Inc. (-3.42%), Monde Nissin Corp. (-3.36%), China Banking Corp. (-2.73%), JG Summit Holdings Inc. (-2.44%), and GT Capital Holdings Inc. (-2.41%) were index laggards.
- Investors also digested the release of the 1st quarter earnings from Manila Electric Co., Union Bank of the Philippines, and Philippine National Bank, as the first-quarter reporting season gains momentum.
- Investors are also bracing for a wave of US corporate earnings and key economic data this week.
READ MORE
USD/PHP closes higher amid dollar recovery
- The USD/PHP exchange rate opened 1.5 centavos higher at 56.28 on Monday, tracking the dollar recovery overnight.
- The local pair was initially well sold, but fixing demand dragged the pair back towards the 56.30 area.
- A further 15-centavo rally to highs of 56.47 followed, but suspected local supply tempered the upward momentum.
- The USD/PHP exchange rate ultimately closed at 56.42, or 15.5 centavos higher day-on-day.
- The current support levels of USD/PHP are at 56.00/20 while the resistance levels are at 56.50/70.
READ MORE
Local GS players focus on the new 10Y bond
- The local government securities (GS) market saw most activity focused on the newly issued 10-year bond, Fixed Rate Treasury Note (FXTN) 10-73.
- FXTN 10-73 remains attractive, offering a solid yield premium over nearby securities such as FXTN 10-72.
- Selling interest from local players briefly pushed FXTN 10-73’s yield up to 6.38%, but buying interest helped it close at 6.3725%.
- Other benchmark bonds were muted, ending within 1.5 basis points of last week’s levels.
- Market attention now shifts to today’s reissuance of the 5-year FXTN 7-70.
READ MORE
PSEi drops amid mixed Asian market performances
- The Philippine Stock Exchange index (PSEi) ended 19.25 points lower at 6,249.50 on Monday, amid mixed performances in Asian markets and slightly lower US futures.
- Index leaders were Bloomberry Resorts Corp. (+10.28%), Emperador Inc. (+4.67%), Ayala Corp. (+3.16%), International Container Terminal Services Inc. (+2.86%), and SM Prime Holdings Inc. (+1.75%).
- Meanwhile, BDO Unibank Inc. (-3.42%), Monde Nissin Corp. (-3.36%), China Banking Corp. (-2.73%), JG Summit Holdings Inc. (-2.44%), and GT Capital Holdings Inc. (-2.41%) were index laggards.
- Investors also digested the release of the 1st quarter earnings from Manila Electric Co., Union Bank of the Philippines, and Philippine National Bank, as the first-quarter reporting season gains momentum.
- Investors are also bracing for a wave of US corporate earnings and key economic data this week.
READ MORE