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The last of the H&M concepts, Beauty, arrives

BACK IN 2015, Swedish fashion retailer H&M threw its US market in a tizzy after launching what came to be known as H&M Beauty, a product line with more than 700 items. Two years after the US launch, the now 1,000-strong selection of beauty products has finally reached Philippine shores.

“We believe the Philippines is now ready for another beauty brand. I know we have a lot of competitors in terms of fashion and beauty in the country [but it’s an indicator that there’s a] big market for beauty, so it’s really the best time to launch,” Dan Mejia, H&M Philippines head of communications and press, told BusinessWorld during the launch on Sept. 5 at the H&M offices in Makati City.

The entire H&M Beauty department — as the products include items for hair care, skin care, nail care, and makeup and makeup tools — will be available starting Sept. 15 in seven of largest H&M branches in the country: SM Megamall, SM North EDSA, SM Mall of Asia, Festival Mall, Ayala Center Cebu, Robinsons Place Manila, and Greenbelt 4.

About 15 sq.m. of the floor space of the select H&M stores will be dedicated to the Beauty department.

The beauty products are relatively affordable as Mr. Mejia said that the price points are very accessible (many products in the US store are priced between $6.99 to $10.)

“For example, the eye contour products are at P349 only. So [the products] follow the H&M philosophy of offering quality at the best prices,” he said.

The company currently has 26 stores in the country with two more locations set open within the year: Robinsons Galleria and another in Tacloban, Leyte.

“With the entry of the Beauty department, we have brought all the H&M concepts in the Philippines,” said Mr. Mejia. — Zsarlene B. Chua

Mexican quake death toll rises

MEXICO CITY — The death toll from the massive earthquake that struck Mexico on Thursday night has risen to at least 90 after emergency services in the southern state of Oaxaca said late on Saturday there had been 71 confirmed fatalities in the state alone.

“It’s 71 (dead). Just for Oaxaca,” said Jesus Gonzalez, a spokesman for the state civil protection authority.

At least 15 people died in the neighboring state of Chiapas, according to local authorities, while another four deaths have also been confirmed in the state of Tabasco to the north.

The 8.1 magnitude quake that struck off the coast of Chiapas on Thursday was stronger than a devastating 1985 temblor that flattened swathes of Mexico City and killed thousands.

Relief efforts in the south continued through Saturday, with many of the people worst affected still wary of returning indoors to weakened buildings, fearing they could be brought down by ongoing aftershocks. — Reuters

T-bill rates to decline on strong investor demand

By Melissa Luz T. Lopez,
Senior Reporter

TREASURY BILLS (T-bills) on offer today will likely fetch even lower yields on the back of strong demand for the debt papers and fuelled by a stronger peso, as the market tracks lower rates in the United States.

Bond traders interviewed on Friday said the Bureau of the Treasury will likely raise P15 billion as planned from the offering of three-month, six-month, and one-year debt notes, with rates expected to drop by five to 10 basis points (bps) from the previous auction.

The Treasury is looking to raise P6 billion in three-month papers, P5 billion in six-month papers, and P4 billion under the one-year tenor.

“We’ll see lower yields by 5-10 bps because if we look at US treasuries, the 10-year [notes] are now about 8-10 bps lower because the non-farm payrolls data was not that good and US GDP (gross domestic product) expectations are not looking good,” one trader said, adding that the impact of Hurricane Irma as well as ongoing geopolitical tensions with North Korea stand as “uncertainties” that provide support to bond rates.

Strong market appetite would also help bring down yields, as the trader expects total tenders to reach as much as three times the P15-billion offering to match the clamor for reissued seven-year Treasury bonds which were sold last week.

During the Aug. 30 auction, 91-day T-bills fetched a 2.143% rate, while the 182-day and 364-day papers saw average yields at 2.592% and 2.935%, respectively.

The one-year notes were quoted lower at 2.8854% at the secondary market as of Friday afternoon, while yields on the shorter papers stood at 2.89% for the 91-day and 2.9471% for the 182-day tenor.

A second trader also attributed the expected decline in rates to lower inflation expectations in the US, as well as a shift in market demand among local investors.

“Demand is now on more on the longer tenor. It’s not on the 91-day to one-year anymore but on the two to 10-year papers,” he said, noting that the Treasury can make a full award but not out of “overwhelming” tenders received during the auction.

The trader said appetite has been recovering for longer tenors as market uncertainties taper off, with bets of another rate hike in the United States by December diminish and as the European Central Bank maintained rates last week. Instead, investors would likely take advantage of the next two weeks to buy bonds ahead of the next meeting of the US Federal Reserve.

The stronger peso — which logged a one-month high of P50.87 per dollar on Friday — would also bolster the case for lower yields, both traders said.

Deputy Treasurer Erwin D. Sta. Ana told reporters last week that ample market liquidity is supporting lower Treasury yields, as players look for outlets where they can deploy their excess funds.

The government is looking to borrow as much as P195 billion from domestic sources this quarter by offering P105 billion worth of T-bills and P90 billion in Treasury bonds, higher than the P180 billion it wanted to raise during the second quarter.

Stirrings

As a political activist, sometimes life seems to be one long meeting, or more precisely, an unending series of meetings. Not that I’m complaining. Last Saturday’s meeting was a good one by the standard of one who has been in countless meetings to discuss issues, analyze problems, decide on a course of action, formulate calls, distill demands, and make concrete plans on arousing, organizing, and mobilizing as many people as possible to take action.

This was a meeting of the movers and shakers behind the Movement Against Tyranny that aims to galvanize public sentiment against the epidemic of extrajudicial killings (EJKs) in the so-called war on drugs and the predilection for strong-arm, tyrannical rule by no less than President Rodrigo Duterte himself.

There was a good mix of people: a former senator, a bishop and several other men and women of the cloth, traditional and social media practitioners, theater and film artists, human rights defenders, student leaders, teachers, lawyers, physicians, street parliamentarians, and plain concerned citizens, many of them veterans of the struggle against the US-backed Marcos fascist dictatorship.

The assessment: public outrage over the recent cold-blooded killings of young people by the police marked a qualitative change from the seeming acceptance of the EJKs as par for the course in government’s heightened anti-crime drive. Standard police cover up for the summary execution of their victims — that those killed are drug pushers, they resisted arrest, or tried to escape — no longer wash. People are just not buying it anymore. The credibility of the police has hit an all time low.

Malacañang is clearly on damage control mode after attempts by Police Chief Dela Rosa, DoJ Secretary Aguirre and even Public Attorney Office (POA) Chief Acosta to discount any pattern to the killings, that these may be the result of state policy. The official line has now evolved from attributing the Kian delos Santos and Carl Arnaiz cases to police abuse by a “few, rotten eggs” to a grand conspiracy of anti-Duterte forces to sabotage his anti-illegal drugs campaign, much more destabilize the Duterte regime itself.

Paid hacks of the Palace are chortling with glee on the President’s public relations coup in meeting with the parents of Kian and Carl, commiserating with them and promising to render justice, then concluding with hugs and smiles all around. The Duterte Damage Control Team must be congratulating themselves in being able to put out that fire by coopting the victims’ families through fair means and foul. But just as they thought they had things under control, and given the unrelenting pursuit of Oplan Tokhang, new dead bodies come up to rile the public once more.

Meanwhile more crucial witnesses have come forward. The taxi driver who, according to the police, was held up by 19-year-old, former UP student, Carl Arnaiz, later killed in a shoot out with responding police, has surfaced. He sought sanctuary with human rights groups. Now that he is no longer under pressure from Caloocan police, he may be able to tell us what really happened and how Carl was involved.

Other witnesses to the Kian killing (there were plenty because the police did their dirty work in a densely populated, urban poor community) are being actively sought by the PNP’s Criminal Investigation and Detection Group in tandem with the PAO and the Volunteers Against Crime and Corruption (VACC). Over the weekend, a standoff took place in the residence of Caloocan Bishop Pablo Virgilio David when the CIDG-PAO-VACC attempted to take custody of a witness being given sanctuary by the bishop. The witness and family members opted to remain under the protection of Bishop David.

The Movement is gearing up for a big rally at the Rizal Park, with a broad representation of different classes and sectors in society, on Sept. 21, the 45th anniversary of the declaration of martial law by the dictator Ferdinand E. Marcos. Malacañang has taken note of this mass protest action and is trying to besmear it as part of the moves of the Opposition against Duterte in order to dissuade people from joining.

The Movement is undeterred and is counting on the coming together of different, even disparate forces and groups, to take a stand and fight a common, malevolent, and dangerous enemy — rising tyranny under Duterte.

Slowly, people are waking up from the stupor of demagogic promises that Duterte will resolve the festering problem of drug trafficking in 3 to 6 months especially after his admission that he may not be able to lick the problem even in his remaining 5 years in office.

One measure is the timely staging of a compendium of plays including musicals on the theme of human rights and civil liberties this month of September.

Taking a break from my regular round of meetings, I watched Tao Po a play consisting of four monologues by Mae Paner aka Juana Change, popular actress cum change agent, much sought after for her one-woman tragicomic political satire.

Journalist Inday Espina-Varona’s writes a capsule review: “Mae Juana Change Paner’s ‘Zumba’ segment in Tao Po (ongoing at the Cultural Center of the Philippines) will linger in the minds and guts of audiences for a long, long time. The comic touches only leave us wide open to the tragedy of a woman who lost husband and son to ‘Tokhang.’ Playwright Maynard Manansala did a fantastic job there. But it is Mae who carries it off, in a performance of extreme physical, cerebral, and emotional challenges. It is ‘Zumba’ that highlight’s ‘Tokhang’s’ real cost to humanity. It is ‘Zumba’ that delivers what Cardinal Tagle wished for — the ‘real face’ of the greatest injustice.”

I personally was struck by the segment on the “double life of a policeman, sworn to uphold the law, and a hitman, paid to violate it.” The irony is that this killer’s class origin is not much different from those of his dirt-poor victims. He is inured to violence at an early age and is recruited into what closely resembles the notorious Davao Death Squad because of the good pay. Part of his indoctrination is the belief that his victims are society’s dregs and are dispensable to make society “safe.” This helps to assuage what little remains of his conscience but he knows the blood of innocents is on his hands even when they are dismissed as nothing more than “collateral damage.”

Perhaps more than the impunity that Duterte promises for those who kill “in the line of duty,” it is the demonization of impoverished drug addicts and small time pushers that impel policemen sworn to “serve and protect” to have such little regard for the sanctity of life.

Carol Pagaduan-Araullo is a medical doctor by training, social activist by choice, columnist by accident, happy partner to a liberated spouse and proud mother of two.

carol_araullo@yahoo.com

Blackwater Elite acquire up-and-coming star Maliksi after grabbing Ellis

FIRST, it’s athletic swingman Chris Ellis. Here comes another potential star in Allein Maliksi.

The deadshot forward is headed to the Blackwater Elite following a late night deal with the Star Hotshots. The Elite will receive Mr. Maliksi and Chris Javier in exchange for Bam-Bam Gamalinda and Kyle Pascual.

Blackwater team owner Dioceldo Sy confirmed to BusinessWorld that they’ve accepted an offer from San Miguel executive Alfrancis Chua to ship Maliksi to the Elite pending the approval of PBA Commissioner Chito Narvasa.

“I think the issue there is the playing time, but with Blackwater he can get the playing time he needs,” Mr. Sy told BusinessWorld in a telephone interview.

After winning four in a row, the Hotshots had lost their last three games, thus dimming their chances of notching a top four berth. In all those losses, Mr. Maliksi, who played for Gilas Pilipinas in the SEABA Men’s Championship, was hardly a factor.

The 6-foot-3, former University of Santo Tomas stalwart scored seven points in barely 14 minutes of playing time in the Hotshots’ 96-90 loss to the Meralco Bolts on Saturday.

For Blackwater, getting a player of Mr. Maliksi’s caliber would mean additional firepower for the squad.

Led by import Henry Walker, the Elite had won four of six games. The addition of Mr. Maliksi could provide Blackwater more scoring punch after Mr. Walker, Mike DiGregorio and guard Roi Sumang. — Rey Joble

High heels out, break time in

SALES LADIES in retail shops and other workers who stand or frequently walk as required by the nature of their jobs will now have to be given “rest periods” by their employers as a new Labor department order takes effect.​ ​ Department of Labor and Employment (DoLE) Order No. 178-17, titled Safety And Health Measures For Workers Who By The Nature of their Work Have to Stand At Work, was released last Aug. 25. Aside from retail and service employees, the order also cites assembly line workers, teachers, and security personnel. Other measures listed are implementing “the use of footwear which is practical and comfortable,” with heels no higher than one inch; installation of flooring or mats that lessen the impact of frequent walking; and provision of sitting areas for the rest period and adjustable work surfaces for alternately sitting and standing while working.​ In a statement, Associated Labor Unions-Trade Union Congress of the Philippines ​Spokesperson Alan​ A.​ Tanjusay sai​d,​ “This is a great relief for salesladies, security guards and production workers in the electronics and food manufacturing​… This new workplace policy is also a big boost to their work productivity and personal well-being.”

A copy of DoLE Order 178-17 may be accessed at: https://goo.gl/WJ28n1

MPTSC aims to double revenues by 2020

METRO PACIFIC Tollways South Corp. (MPTSC) is targeting to double its revenues by 2020, as it opens new road segments in the next few years.

“Our revenue now is… P1.468 billion in 2017. We hope to be able to double that in four years, by 2020. We hope to be able to do P3.4 billion,” MPTSC President Luigi L. Bautista said in a recent interview.

Mr. Bautista said the company anticipates increased revenues with the completion of the Cavite-Laguna Expressway (CALAX), and the C-5 South Link, which is part of the Cavite Expressway (CAVITEx) franchise.

“That’s in time for the completion of CALAX, C-5 South Link…Our driver is new and existing projects [and] new road segments that will be opened,” Mr. Bautista added.

Mr. Bautista said Phase 1 of the C-5 South Link project is expected to be completed by the end of 2018. The estimated cost of Phase 1 is P1.5 billion. The whole project has a total length 7.7 kilometers and will cost around P14.8 billion.

“We’re now building the flyover across [South Luzon Expressway] SLEx that would lead us to the on-off route near Merville… We hope to be able to complete that in 1.5 years… Towards the end of next year, we hope we’ll be operational already,” Mr. Bautista said.

He noted right-of-way acquisition for Phase 2, which will connect Merville to Sucat, is now underway. Phase 3 of  the project will connect Sucat to R1 Expressway or Coastal Road.

The two other projects under the CAVITEx franchise are the Segment 4 extension, a 1.2-kilometer link between CAVITEx and CALAX, and Segment 5, which will cover the Kawit-Noveleta-Rosario route.

However, Mr. Bautista said the company will only build the Segment 4 extension together with CALAX, while Segment 5, which is “about 9.5 kilometers,” is currently undergoing feasibility study.

“[We have an] ongoing detailed feasibility study… It also covers studying the feasibility to do a spur road to Sangley. We hope [for the study to] be completed by the end of the year. That’s the only time we will know if the project is viable or not to construct at this time… We’re only going to build Sangley spur [road] if Sangley [airport] is going to be developed,” Mr. Bautista said.

The government earlier said it is spending around P600 million to P700 million to develop the airport at Sangley Point in Cavite. The Tieng-Sy consortium had also proposed a $50-billion project to develop an airport and economic zone at Sangley Point involving the transfer of both general aviation and low-cost carriers to the base.

For the CALAX, Mr. Bautista said that the contractor for the Cavite segment will be Leighton Contractors Asia Ltd.

The Metro Pacific group in June broke ground for the Laguna segment of the P35.43-billion project.

Mr. Bautista said for the right-of-way negotiations, the Department of Public Works and Highways has said that it will deliver 10 to 11 kilometers by October, and the rest of the 27-kilometer alignment by January next year.

“The government said [that] 11 km. of Laguna side will be available by January next year… So by January next year, [we will go ] full blast on the entire alignment,” Mr. Bautista said.

MPTSC is a subsidiary of MPIC, which is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Patrizia Paola C. Marcelo

AC Energy keeps focus on Indonesia, Vietnam

AC ENERGY Holdings, Inc. is focusing on Indonesia and Vietnam for its regional expansion in line with its thrust to boost its renewable energy portfolio.

AC Energy President and CEO Eric T. Francia said in an interview the subsidiary of Ayala Corp. prefers to develop greenfield renewable energy projects in the region, but remains open to potential investments in conventional energy.

“We’re hoping for something concrete, but it’s going to take another six months or so,” Mr. Francia said.

Ayala is expanding its partnership with UPC Renewables in Indonesia, while it is in talks with local partners in Vietnam.

“Vietnam and Indonesia are just starting in solar and wind and we have a lot of experience in that,” Mr. Francia said.

By 2020, AC Energy aims to reach 2,000 megawatts (MW) of attributable capacity — or the equivalent in megawatts of its economic stake in various projects — of which 1,000 MW is targeted to be renewables. It reached 1,000 MW in 2016, with renewable energy accounting for less than 10%.

Its 19.8% stake in the 637-MW geothermal steam and power capacity in Darajat and Salak geothermal fields along with its 75% stake in the 75-MW wind farm project in Sidrap more than doubled the company’s clean energy capacity to at least 264 MW. 

Last July, AC Energy entered into a development funding arrangement with UPC Renewables Asia Pacific Holdings Ltd. and UPC Renewables Asia I Ltd. for the development of small island power projects in Indonesia.

“We want to invest in more renewables because that’s the emerging technology. In the Philippines, everyone’s still waiting for the renewable portfolio standards (RPS),” Mr. Francia said, referring to the long-delayed rules that will require distribution utilities and other industry participants to source a portion of their power supply from eligible renewable energy resources.

Wala nang (feed-in tariff). The next underlying mechanism to promote renewable energy is RPS but we’re still waiting,” he said.

In the Philippines, AC Energy has a 20% stake in the 632-MW GNPower Mariveles Coal Plant Ltd. Co.; 50% in the 668-MW GNPower Dinginin Ltd. Co.; 35% in the 244-MW South Luzon Thermal Energy Corp.; and 85% in the 552-MW GNPower Kauswagan Ltd. Co.

“We still have expansion potential for one of our GN assets,” Mr. Francia said.

AC Energy is open to acquiring existing power assets in the Philippines, but the environment remains “challenging” because of depressed prices in the overall market amid an oversupply situation. — Krista Angela M. Montealegre

Senate to look into ‘disappearing’ prepaid load

THE SENATE is set to conduct an investigation into the telecommunications industry’s treatment of prepaid load on Wednesday, Sept. 13.

Senate committee chair on public service, Sen. Grace Poe, said that the hearing will discuss Senate Bill No. 848 or the proposed Prepaid Load Protection Act of 2016, which prohibits telecommunication companies from imposing an expiration period on the validity of prepaid credits and the forfeiture of “load.”

Under the proposed Prepaid Load Protection Act, telecommunication companies will not be able to impose an expiration period on the validity of unused prepaid call and text credits.

In addition, the bill prevents telcos from forfeiting load credits stored on an active prepaid phone. Companies are also required to refund prepaid subscribers whose load credits are forfeited without any valid cause.

If a company is found violating the ordinance, its license may be revoked or it may be served with a fine of up to P1 million.

According to a statement released by Ms. Poe on Sunday, telcos like Smart Communications, Inc., PLDT, Inc. and Globe Telecom, Inc. have been invited to the proceedings as well as representatives from the National Telecommunications Commission.

When asked if industry players will welcome the Prepaid Load Protection Act, Globe Telecom’s Senior Vice-President, Corporate Communications Group, Yolanda C. Crisanto, said in a text message to Businessworld that the company is still waiting for the position paper of the Philippine Chamber of Telecommunications Operators (PCTO).

PCTO and Smart/PLDT have yet to respond to queries as of press time.

The Prepaid Load Protection Act of 2016, authored by Senate President Pro-Tempore Ralph G. Recto, is on its first reading. It has been referred to the Senate Committee on Public Services and Trade, Commerce and Entrepreneurship. — Mario M. Banzon

Good quality for its price point

NOW THAT H&M Beauty has landed in Manila, this writer — like numerous other beauty enthusiasts — was looking forward to trying out some of the products which are said to be affordable and of high quality. After the launch, I got to bring home several products to try out.

My conclusion: these things are work really well for its price point.

LIPSTICK
First things first, lip colors: I got two shades from the Cream lip color line, Brunette Ambition and True Falu.

Brunette Ambition is a mauve-y brown shade that looks perfect for those deeper skin tones if they are going for a nude lip. It looks a bit dark on my fair, neutral toned skin, but it still looks pretty good. True Falu is a gorgeous blue-based red and is perfect for my skin tone. I can see myself rocking this on night events or even in daytime.

Since both are cream formulations, they are not transfer-proof and are generally not long-wearing unlike the matte lip colors — which H&M also has — but what it lacks in wear time and transfer, it makes up for in color as both shades swatched really well without patchiness and are very highly pigmented.

After trying them out over three days, I found that the lip color can last around four hours before fading without taking meals, but if meals are taken, retouching is absolutely necessary.

One would only need one swipe to cover the lips, but another wouldn’t hurt. It’s also non-drying, unlike the matte formulation which reminded me of Mac matte lipsticks which can be pretty drying.

For a person who’s over the matte lip trend, the white bullet-shaped lipstick with a gold-colored base is a beautiful acquisition. (The matte comes in black and gold packaging to make it easily distinguishable.)

BLUSH
The other thing that I’m absolutely loving right now is the Pure Radiance Powder Blusher which I have in Tango Pink, a dusky pink.

Now, the thing about this blush is it is sheer if applied using fingers or a sponge but is highly pigmented when using a brush. Or maybe that’s just my Cargo Magic Brush talking because this blush brush has really dense fibers.

But either way, it’s a beautiful color which goes really well on my cheeks for that almost-natural glow. And the wear isn’t too shabby because it lasted me a solid six hours under humid conditions. One must consider though that my face isn’t oily and I’m only prone to a little shine on my nose.

The packaging is a little cheap-looking as the product is encased in a thin hexagonal plastic compact in black and gold and comes without a mirror, puff or sponge. It might turn one off, but the product works really well for its price so it’s really worth a shot.

NAIL POLISH
A product I’m also currently using is the Copper Rose Nail Polish. During the launch, a lot of people were gushing about the polish and as soon as I put it on myself, I understood why: the formula is pigmented and the brush is fantastic.

I always had problems with nail polish because I have short, stubby fingernails but the brush on this one works really well and in one swipe, covers almost my entire nail sans the usual mess. Copper Rose, as it name suggests, is copper with a slight pink undertone which makes it really wearable.

EYE PENCIL
Lastly, though it might not be my style, I was pretty impressed with the Color Essence Eye Pencil which comes in multiple shades. I got the one called Jade Silver which is a shimmery teal pencil. It’s really highly pigmented and is absolutely waterproof. It’s also not too creamy nor too hard, so it has the perfect texture.

So there, H&M has pretty good stuff out there so I suggest you prepare yourself for a large haul once Sept. 15 rolls in. — Zsarlene B. Chua

Germany’s Merkel suggests Iran-style nuclear talks to end North Korea crisis

BERLIN — German Chancellor Angela Merkel told a newspaper she would be prepared to become involved in a diplomatic initiative to end the North Korean nuclear and missiles program, and suggested the Iran nuclear talks could be a model.

South Korea on Saturday braced for a possible further missile test by North Korea as it marked its founding anniversary, just days after its sixth and largest nuclear test rattled global financial markets and further escalated tensions in the region.

“If our participation in talks is desired, I will immediately say yes,” Ms. Merkel told Frankfurter Allgemeine Sonntagszeitung in an interview to be published on Sunday.

She pointed to negotiations that led to a landmark nuclear agreement between Iran and world powers in 2015. Back then, Germany and the five countries on the United Nations Security Council with veto power took part in talks that led to Iran agreeing to curb its nuclear work in return for the lifting of most sanctions.

Ms. Merkel said that was “a long but important time of diplomacy” that ultimately had a “good end” last year, referring to when the deal was implemented.

“I could imagine such a format being used to end the North Korea conflict. Europe and especially Germany should be prepared to play a very active part in that,” Ms. Merkel added.

She said she thought the only way to deal with North Korea’s nuclear program was to come to a diplomatic solution, adding: “A new arms race starting in the region would not be in anyone’s interests.”

Europe should stand united in trying to bring about a diplomatic solution and “do everything that can be done in terms of sanctions,” she said.

Ms. Merkel is expected to win a fourth term in office in a Sept. 24 vote, with polls giving her conservatives a double-digit lead over their rival Social Democrats.

Ms. Merkel is widely seen in Germany as a safe pair of hands at a time of global uncertainty such as the North Korea crisis, Britain’s looming departure from the European Union and Donald j. Trump’s presidency in the United States.

Ms. Merkel has spoken to leaders including Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe about North Korea this week. — Reuters

Yields on gov’t debt flat on Fed rate hike doubts

By Jochebed B. Gonzales,
Researcher

YIELDS on government securities ended flat last week due to investor preference for bonds over shorter-dated securities amid doubts on the possibility of another US rate hike before yearend.

Debt yields, which move opposite to prices, inched up by 0.67 basis point (bp) on average week-on-week, data from the Philippine Dealing and Exchange Corp. as of Sept. 8 showed.

“Yields moved sideways [last Friday] amid mixed developments abroad,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (Landbank).

“Yields initially fell due to soft US non-farm payrolls and dovish remarks from Fed [Gov. Lael] Brainard about low inflation in the US. The decline in yields reversed towards the end of the week following news that the US fiscal plan includes a 3-month suspension of the debt ceiling.”

A bond trader agreed, saying: “Bond yields tumbled as both market players and end-user demand [were] in full form, tracking the move of US Treasuries and [German] Bunds.  A dovish ECB (European Central Bank) and expectations that the Fed can’t hike again in 2017 helped boost bond buying.”

Jobs growth in the US fell short of expectations after the Bureau of Labor Statistics reported only 156,000 additional non-farm payrolls employment in August versus 180,000 estimate by analysts. Unemployment rate was also higher that month at 4.4%, from 4.3% in July.

While the jobless rate had averaged five percent in the last five years, a rate comparable to pre-crisis levels, Fed’s Ms. Brainard said the central bank should be cautious of further raising interest rates as inflation remains below the two-percent target.

Meanwhile, US President Donald Trump signed a three-month extension of debt ceiling which allows the Treasury to borrow money without approval from the Congress.

The 10-year US benchmark bond closed at 2.0507% last Friday, 11.5 bps lower from the previous week’s 2.1657% closing.

In Europe, the ECB kept rates at zero percent while continuing its €60 billion monthly asset purchases “intended to run until the end of December 2017, or beyond, if necessary…” according to ECB President Mario Draghi.

On the domestic front, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said local debt yields were lower last week as the market “has been more likely choosing other earning means.”

“For example, the BSP (Bangko Sentral ng Pilipinas) this week has further eased their mopping up activities because of the increased demand for credit across the board due to the rapidly growing economy,” he said.

At the secondary market on Friday, yields closed lower across the board except those on the 91- and 182-day Treasury bills (T-bills) which rose sharply by 76.81 bps and 42.82 bps, respectively, to 2.89% and 2.9471%, offsetting declines in other tenors.

The yield on the four-year Treasury bond (T-bond) fell the most, by 48.59 bps, to close at 3.7105%. It was followed by the three-, seven-, and 10-year T-bonds which respectively lost 14.72 bps, 14.89 bps and 12.84 bps, to finish with 3.6007%, 4.2771% and 4.5379%.

The five- and 20-year bonds also saw their yields decrease by 10.86 bps and 8.47 bps, respectively, to end with 4.4821% and 5.083%.

The yields on the 364-day T-bills and two-year T-bonds were almost unchanged after shedding 0.76 bp and 1.85 bps, respectively, to 2.8854% and 3.8404%.

“[This week], yields might rise further amid likely stronger US data on producer and consumer price inflation. These reports might improve the chances of another US rate hike this year,” said Landbank’s Mr. Dumalagan.

For UnionBank’s Mr. Asuncion, bond yields are likely to tread the same path as last week’s.