Yields on gov’t debt end mixed amid volatile trade

YIELDS on government securities (GS) traded at the secondary market ended mixed last week amid a rise in US yields and a weakening peso as US Federal Reserve officials signaled caution on future rate cuts.

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The 25-year T-bond inched down by 0.11 bp to 6.3434%.

GS volume traded declined to P34.38 billion on Friday from P43.82 billion a week prior.

Traders said that yields at the short end mostly went down to reflect bets on the Bangko Sentral ng Pilipinas’ (BSP) policy path.

“The yield curve steepened week on week as investors focused demand at the short end, reflecting sustained conviction in the BSP’s easing cycle,” the first bond trader in a Viber message.

“[Fed Chair Jerome H.] Powell’s remarks about balancing inflation and labor market risks reinforced the ‘higher-for-longer’ stance. This means that the front end was relatively anchored given expectations that the BSP will hold rates steady for now,” the second trader said.

Last week, BSP Governor Eli M. Remolona, Jr. said they could lower borrowing costs further as early as October if the economy shows signs of losing momentum.

The Monetary Board last month slashed benchmark rates by 25 bps for a third straight meeting to bring the policy rate to 5%. This brought cumulative cuts since August 2024 to 150 bps.