Philippines Sovs Curve Steeper, Central Bank Unlikely To Cut Rates

Philippines USD sovereign debt curves have slightly steepened over the day, with the PHILIP curve under-performing the move lower from US Treasuries. The Philippine central bank may not cut rates anytime soon, as inflation halts a four-month slowdown, with food prices rising.

• The 2Y yield is 1 bp lower at 4.80%, the 10Y yield is 1 bp higher at 5.00%, while 5yr CDS is up +0.75 bps.
• The spread differences between US and PHILIP yields have been closing in the front end, although lagged the move tighter on Tuesday. The 2Y spread is now 25 bps (+5 bps overnight) from 45 bps a month earlier, while the 10y spread of 85 bps is unchanged from a month prior.
• Cross-asset moves: the USD/PHP is down 0.15%, PSEi Index is 0.47% lower, Corporate Credit curve is unchanged, while US Tsys are 1 bp lower.
• Philippine central bank Governor Eli Remolona stated that it is unlikely they will ease monetary policy soon, emphasizing the need to analyze data before making any decisions. He also mentioned that it is still too early to confidently assert that inflation is comfortably within the Bangko Sentral ng Pilipinas' 2%-4% goal but expressed confidence in managing price expectations.
• Looking Ahead: Feb Foreign Reserves are Due out on Thursday