Yields on gov’t securities go down at 2017’s close

YIELDS on government securities (GS) traded in the secondary market went down almost across the board last week as market players preferred to stay on the sidelines as the year came to an end.

On average, GS yields — which move opposite to prices — went down by 12.29 basis points (bps), data from the Philippine Dealing & Exchange Corp. as of Dec. 29 showed.

“It’s the market’s preparation for next year,” Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines (UnionBank), said.

“Demand, I think, was higher as the year ends. The general perception about the economy’s positive growth prospects was probably a factor as well,” Mr. Asuncion said.

Meanwhile, a bond trader said the yield curve saw a “steepening bias” with most dealers opting to stay at the short-end of the curve given a lack of fresh leads.

Volumes also thinned given the holiday season, according to a bond trader, with most investors staying on the sidelines.

Trading in local fixed-income securities last week was shortened in observance of Christmas day, with the government also extending the holiday for government offices nationwide last Dec. 26.

At the secondary market on Friday, in the short end of the curve, the 91-day Treasury bill (T-bill) lost 74.34 bps to yield 2.4316%. The 182- and 364-day T-bills also saw their yields decline by 6 bps and 4.62 bps to 3.3075% and 3.032%, respectively.

In the belly, yields on the three-, four-, five- and seven-year Treasury bonds (T-bonds) were down by 14.59 bps (4.2977%), 3.08 bps (4.9211%), 1.22 bps (4.7437%), and 11.06 bps (5.3279%), respectively.

On the other hand, the rate of the two-year security went up by 2.47 bps to yield 3.9864%.

In the long end, the 10- and 20-year T-bonds decreased by 12.83 bps and 3.01 bps to yield 5.6986% and 5.7038%, respectively.

For this week, UnionBank’s Mr. Asuncion said: “[This] week, as a new year begins, I see more of positive perception and I expect a further pick up on demand as the market prepares for a robust 2018.”

As the market resumes sessions, the bond trader noted that investors will take their cue from the inflation data set to be released by the Philippine Statistics Authority on Friday.

Inflation likely stood steady in December to match the previous month’s pace, analysts tapped in a BusinessWorld poll said last week.

A poll among 12 economists yielded a 3.3% median forecast for the month, which if realized will match November’s pace but will jump from the 2.6% reading in December 2016. — R.O.R. Reusora