Market Summary

Yield Movements

Between 31 August and 15 October, the Philippines’ local currency (LCY) government bond yield curve steepened as yields at the shorter end of the curve declined and those at the longer end rose. Yields rose in early September, particularly among longer tenors, as the market tracked movements in United States (US) Treasury yields, which rose due to positive developments in the trade talks between the People’s Republic of China and the US. Market participants also started to take profits following the rally in government bonds since the start of the year, which was brought about by the monetary easing conducted by the Bangko Sentral ng Pilipinas (BSP).

Size and Composition

LCY bonds outstanding in the Philippine market marginally declined 0.1% quarter-on-quarter (q-o-q) to PHP6.69 trillion (USD129.2 billion) at the end of September from PHP6.71 trillion at the end of June. This was driven by a 0.7% q-o-q decline in government bonds outstanding to PHP5.3 trillion. Meanwhile, corporate bonds outstanding rose 2.1% q-o-q to PHP1.4 trillion at the end of September.

Policy, Institutional and Regulatory Developments

In October, the Bangko Sentral ng Pilipinas launched the first Other Financial Corporations Survey (OFCS), a comprehensive measure of the assets and liabilities of other financial corporations. These include, among others, trust entities, private and public insurance companies, government financial institutions, and nonmoney market funds covering unit investment trust funds and investment companies. The OFCS aims to identify the concentration of vulnerabilities in the financial sector in relation to other sectors in the economy.