Philippines Sov Curve Bear-Steepens, Rate Cuts More Likely In 2025

The Philip sov debt curve has bear-steepened today with yields 2-10bps higher, following moves made in US treasuries on Monday. The window for the Philippine central bank to start reducing the key rate in the second half of 2024 is narrowing as the risk that inflation may breach its target for a third straight year rises. The PHP has weakened to 57 for the first time since Nov 2022, with the central saying that they have hardly intervened in the currency market over the past few weeks.

• Curve has continued recent trends and bear-steepened today, yields are 2-10bps higher across benchmarks with the 2Y yield 2.5bps higher at 5.045%, 5Y yield is 3.5bps higher at 5.315%, 10Y yield is 9bp higher at 5.47%, while 5yr CDS is 2bp higher to 69bps and now the highest levels since late Nov 2023.
• The Philip to US Treasury spread has widen over the past few days, especially in the long-end where we have erased the past month of tightening, the 2y 12bps (+3bp), the 5yr is 69bps (+4bps), while the 10yr is 85.5bps (+10bp).
• Cross-asset moves: the USD/PHP is up 0.30% at 56.990, after earlier touching 57.000, PSEi Index is down 1.55%, while US Tsys yields are mostly unchanged.
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