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Economic
Research
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6
July 2017
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Philippines
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Economic Update
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Headline
inflation continued to ease to 2.8% YoY in June, from +3.1% in May, on the
back of slower increases in the heavily-weighted prices of food, clothing,
transport, health, housing equipment, recreation & culture as well as
housing & utilities. Going forward, we forecast inflation to rise to 3%
in 2017, from +1.8% in 2016. This is a downward revision from previous
estimation of 3.3% given moderating energy and food prices and also a higher
base in 2H16. The higher inflation in 2017 is premised on:
1.
Higher domestic fuel prices compared to a year earlier;
2.
An upward adjustment in electricity rates;
3.
Resilient domestic demand;
4.
The tax policy reform programme.
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Friday, July 7, 2017
Inflation Continues To Ease In June
The next tender to watch is the very first re-opening of the 30-year MGII in July 2017. It will be the fifth reopening of MGII in 2017.
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Dear Readers,
Highlights
of the report as follow:-
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·
The
re-opening of the 7-year MGS maturing 30 September 2024 with a size of
RM3.0bil recorded a strong bid-to-cover (BTC) ratio of 2.877 times. This was
the highest BTC ratio since the 7-year MGS reopening in January 2012 which
registered 3.593 times BTC ratio.
·
There
was strong buying interest in this paper despite the spread having narrowed
by 13bps to 174bps in the past two weeks as US Treasury yields have started
picking up amid speculation surrounding possible changes monetary policy
changes of ECB and BOE.
·
The
next tender to watch is the very first re-opening of the 30-year MGII in July
2017. It will be the fifth reopening of MGII in 2017.
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The 7-year MGS (MGS Sep’24) reopening auction received with firm demand. Excluding RM1.0 billion private placement, the RM3 billion public tender saw bid-to-cover of 2.877 times at average yield 3.919%. This was near the lowe
7-year
MGS auction
- The 7-year MGS (MGS Sep’24) reopening auction received with firm demand. Excluding RM1.0 billion private placement, the RM3 billion public tender saw bid-to-cover of 2.877 times at average yield 3.919%. This was near the lower range of WI quotes between 3.92-3.96%.
- In our opinion, demand was driven by bargain-hunting interest as MYR bond yields rose post Raya holidays, tracking the weakened UST amid increased hawkish remarks by global central bank officials. Total outstanding amount along MGS Sep’24 rises to RM8.0 billion after the latest auction, while year-to-date issuances of MGS+GII has climbed to RM62 billion, in contrast to our full-year forecast RM107 billion.
- Meantime, the 5x7 spread is now near the median year-to-date spread of 24bps, but the 7x10 spread remains tight at 3bps, against mean spread of 10bps on year-to-date basis. We think that the 7-year MGS appears to be fairly priced at 3.919%, but cautious on the 10-year MGS at this juncture. Elsewhere, we expect overall market to move sideways with weakening bias amid cautious stance due to renewed rate hike speculations awaiting MPC meeting slated for 13 Jul. Nevertheless, the 7-year MGS should see decent support amid a lack of fresh supply on the shorter dated papers in the near term (next will be new 3-year MGS scheduled in mid-Aug).
Nikko AM to debut Japan’s first Asia ex-Japan REIT ETF
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