Philip Sov Debt Curve Flattens,Rice Prices Driving Inflation Higher

Philippines USD sovereign debt yields are flatter today with the front end out the the 5Y, 1-3bps higher, while out longer yields were 1bps lower. Philippines CPI was out earlier coming in above expectations at 3.4% vs 3.00% expected and up from 2.8% in Jan, higher inflation was mainly driven by an increased in food and non-alcoholic beverages at 4.6% vs 3.5% in Jan with the cost of rice contributing the most.

• The 2Y yield is 2bps higher at 4.80%, 10Y yield is 1bps lower at 5.01%, while 5yr CDS is unchanged at 61.5bps
• The spread differences between US and PHILIP yields has been closing in the front end as 2Y is now 20bps from 42bps a month earlier, while the 10y spread has widened to 80bps from 77bps a month ago
• Cross-asset moves, the USD/PHP is unchanged, PSEi Index is 0.20% lower, Corporate Credit curve is unchanged, whilst US Tsys are 1bps lower
• Philippines Finance Secretary Ralph Recto says reducing Inflation is a top priority for the Administration, mentioning the government and Bangko Sentral ng Pilipinas are working in sync to ensure that both non-monetary and monetary measures prioritize growth and price stability. While Inflation rate to stay “within manageable levels” as government implements measures to effects of El Niño, which may peak this month and persist until May.
• Coming up Philippines to Sell PHP30b 7yr Bonds at 4:15pm aest.