Debt yields go down on weak GDP data

YIELDS on government securities (GS) traded in the secondary market declined last week as below-target Philippine gross domestic product (GDP) growth last year raises the odds of further easing by the Bangko Sentral ng Pilipinas (BSP).

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GS yields, which move opposite to prices, went down by 7.14 basis points (bps) on average week on week, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 30 published on the Philippine Dealing System's website.

At the short end of the curve, yields on the 91-, 182-, and 364-day Treasury bills (T-bills) dropped by 8.38 bps, 6.34 bps and 5 bps week on week to 4.6826%, 4.7725% and 4.8412%, respectively.

Similarly, at the belly, rates fell across all tenors. Yields on the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) went down by 11.04 bps (to 5.1883%), 11.78 bps (5.3796%), 12.06 bps (5.5283%), 11.05 bps (5.6551%), and 8.19 bps (5.8549%), respectively.

At the long end, yields ended mixed. The rates of the 20and 25-year debt papers went up by 1.31 bps (to 6.5127%) and 1.61 bps (6.5117%), respectively, while the 10-year bond went down by 7.67 bps to fetch 5.9868%.

GS volume traded on Friday reached P118.3 billion, higher than the P102.98 billion recorded a week earlier.

Yields declined almost across the board as weaker-than-expected Philippine GDP growth bolstered expectations of a BSP rate cut this month, a bond trader said in an e-mail.