Yields on government securities (GS) rose across the board last week as the Philippine central bank hiked key interest rates by 50 basis points (bps) to help stem elevated inflation. READ:
YIELDS on government securities rose across the board last week as the Philippine central bank hiked key interest rates by 50 basis points to help stem elevated inGS yields, which move opposite to prices, went up by an average of 8.83 bps week on week, based on PHP Bloomberg Valuation Service Reference Rates as of Feb. 17, published on the Philippine Dealing System’s website.
At the long end of the curve, yields on the 10-, 20-, and 25-year debt papers gained 13.63 bps, 3.30 bps, and 4.15 bps to 6.3635%, 6.5725%, and 6.5772%, respectively. “Expectations that the Federal Reserve may need to hike their terminal rate after a string of better-than-expected US data was the main factor for this shift in sentiment. Onshore, the 50-bp increase and high inflation all played a part in pushing yields higher,” Mr. Mapa said.
“This is bad news for the local GS market, with the prospect of a prolonged tightening cycle and a period of elevated yields,” the trader added. Meanwhile, mixed US consumer inflation data released last week supported worries over further rate increases by the Fed. The US central bank has raised its fed funds rate by 450 bps since March 2022 from near zero to a 4.5%-4.75% range, with the latest move being a 25-bp increase earlier this month.
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