Debt yields end mixed amid market volatility

YIELDS on government securities (GS) were mixed last week amid broad market volatility due to developments at home and overseas, with the peso hitting a new record low and the US Federal Reserve adopting a cautious tone.

-  Pierce Oel A. Montalvo with Reuters

GS yields, which move opposite to prices, declined by an average of 0.76 basis point (bp) week on week at the secondary market, according to data from the PHP Bloomberg Valuation System Reference Rates as of Oct. 30 published on the Philippine Dealing System’s website.

Philippine financial markets were closed on Oct. 31 for a holiday.

At the short end, yields on the 91and 182-day Treasury bills (T-bills) went down by 3.12 bps (to 4.8951%) and 0.11 bp (5.0966%) week on week, respectively. Meanwhile, the rate of the 364-day T-bill rose by 1.55 bps to 5.1781%.

At the belly of the curve, rates of the two-, three-, and four-year Treasury bonds (T-bonds) dropped by 1.51 bps (to 5.3924%), 0.87 bp (5.5055%), and 0.43 bp (5.6100%), respectively. Meanwhile, the fiveand seven-year bonds climbed by 0.23 bp (to 5.7025%) and 1.14 bps (5.8366%), respectively.

Rates at the long end declined, with the 10-, 20-, and 25-year T-bonds falling by 4.12 bps (to 5.9382%), 0.57 bp (6.4221%), and 0.53 bp (6.4205%), respectively.

GS volume traded surged to P70.02 billion as of Oct. 30 from P28.52 billion a week prior.

“ [The] volatility with regards to the foreign exchange moves spilled over in the local bond markets as well, especially when the peso hit all-time low levels,” Dino Angelo C. Aquino, vice-president and head of fixed income at Security Bank Corp., said in an email.

“Rates are relatively elevated at current levels, with the 10-year bond still trading at around 5.9% as recent political noise along with the weakness of the local pair added premium to current GS yields, especially in the longer-dated maturities.”