Debt yields end week mixed

YIELDS on government securities (GS) saw mixed movements last week as investors await the central bank’s monetary policy rate action and as the market priced in trade war concerns between the US and

China.

On average,

GS yields — which move opposite to prices — were down by 4.53 basis points (bps), data from the Philippine Dealing & Exchange Corp. as of Aug. 3 showed.

“In general, the market has been anticipating the ‘strong response’ by the BSP (Bangko Sentral ng Pilipinas) and rein in inflationary pressure,” said Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines. “A more hawkish BSP is pushing yields down as the market waits for a monetary policy rate action.”

For his part, Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan said: “GS yields fell [last] week due to renewed concerns over the trade war between the US and China, with both countries threatening to impose more tariffs on each other.”

“There was also some market reaction to the BoJ’s (Bank of Japan) dovish stance, which was contrary to hawkish expectations of some tweaks to the BoJ’s target yield for the benchmark 10-year bond,” Mr. Dumalagan added.

Last month, central bank Governor Nestor A. Espenilla, Jr. said that the BSP is considering a “strong follow-through” policy action at its Aug. 9 meeting to temper rising inflation.