Global and Philippine Market Update

May 8 to May 14, 2025

Global Markets

Global Stocks rallied as trade tensions eased and CPI data came in better than expected.

• Major US stock indices experienced significant gains, buoyed by easing trade tensions and favorable inflation data. Investor sentiment improved following a 90-day tariff truce between the US and China, and lower than expected CPI Data. Tech stocks led the rally with Nvidia surpassing Apple as the world’s most valuable company, and other tech gains like Tesla and AMD posting significant gains. The S&P 500 climbed back into positive territory for 2025 adding 0.1% and the tech heavy Nasdaq rose by 0.7%.
  
  
• US and China have reached a significant agreement to de-escalate their ongoing trade war by implementing a 90-day reduction in tariffs. The U.S. agreed to lower tariffs on Chinese goods from 145% to 30%, while China reduced its tariffs on U.S. products from 125% to 10%. This temporary truce aims to provide both nations with a window to negotiate a more comprehensive trade deal. The agreement has been welcomed by global markets, with tech stocks rallying. However, experts caution that this is a short-term fix, and substantial differences remain between the two countries.
  
  
• US inflation cooled more than expected, with the Consumer Price Index rising 2.3% annually—the slowest pace since February 2021—despite recent tariff escalations under President Trump. Economists caution that the full inflationary impact of these tariffs may emerge in the coming months as businesses deplete pre-tariff inventories and pass on higher costs to consumers. The Federal Reserve is maintaining a cautious stance, keeping interest rates steady while monitoring potential long-term effects on inflation and economic growth.
  
  
• JPM has lowered its forecast for a U.S. recession in 2025 to below 50%, down from 60%, following President Trump’s 90-day tariff truce with China. This easing of trade tensions is expected to boost consumer spending, leading JPM to raise its GDP growth projection from 0.2% to 0.6%. However, inflation remains a concern, with the personal consumption expenditures price index projected at 3.5%, above the Federal Reserve’s 2% target. Consequently, JPM anticipates the Fed will delay interest rate cuts until December, with three additional cuts expected by mid-2026.

Philippine Stocks

Philippine Stocks  extended their gains on US-China trade truce and peaceful elections.

• The PSEi continued to rally, closing higher week on week up by 1.34% as investors reacted positively to the 90-day tariff truce between the U.S. and China. The broader all-share index also rose driven by optimism surrounding trade negotiations and the peaceful outcome of the Philippine midterm elections. Sectoral indexes saw widespread gains, with services, holding companies, and industrial stocks leading the rally, while mining and oil stocks declined. Despite the market’s strong performance, analysts noted that sustainability will depend on upcoming corporate earnings reports and U.S. inflation data.
  
  
• The U.S.-China trade truce is expected to provide short-term relief to Philippine financial markets, which have faced volatility in recent months. The 90-day tariff pause has boosted investor confidence, with analysts predicting a positive impact on equities, including the PSEi. The agreement has also strengthened the U.S. dollar, reducing the likelihood of stagflation in the U.S. However, experts caution that the truce is temporary, and global trade uncertainties could still affect market stability. The peso is expected to remain within the P55 to P56 range, while investors closely monitor further developments in trade negotiations.

Philippine Bonds

Philippine Bond yields dropped amid BSP’s dovish stance.

• Philippine bond yields experienced a modest decline, influenced by dovish signals from the BSP and easing inflationary pressures. The BSP’s openness to further rate cuts, following a slower-than-expected economic growth of 5.4% in the first quarter and a significant drop in April inflation to 1.4%, bolstered investor confidence in the bond market . Yields on short-term Treasury bills decreased across the board. The 91-day T-bill yield fell to 5.546%, the 182-day to 5.650%, and the 364-day to 5.655% reflecting strong demand and expectations of continued monetary easing . Longer-term yields also showed a downward trend, with the 10-year bond yield declining to 6.202% by May 14 . Analysts anticipate that the BSP may implement additional rate cuts totaling up to 75 basis points within the year, potentially driving yields lower and enhancing the appeal of Philippine bonds to investors.
  
  
• The Philippine government successfully raised P40 billion through a dual-tranche Treasury bond auction, despite mixed rate movements and investor caution amid global uncertainties. The BTr awarded P15 billion in three-year T-bonds, which attracted strong demand with bids totaling P63.9 billion, resulting in a lower average yield of 5.703% compared to previous auctions. Meanwhile, the government borrowed P25 billion via 20-year T-bonds, which saw bids of P27.9 billion but fetched a higher average rate of 6.486%, reflecting tighter liquidity conditions. Analysts noted that investors favored shorter-term bonds due to ongoing global trade uncertainties, while long-term debt required a premium for risk compensation.

WD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

Sources: (1) https://amp.cnn.com/cnn/2025/05/12/business/us-china-trade-deal-announcement-intl-hnk (2) https://www.cbsnews.com/amp/news/cpi-report-today-april-2025-inflation-trump-tariffs/ (3) https://www.foxbusiness.com/economy/jpmorgan-lowers-recession-probability-after-trumps-tariff-truce-china.amp (4) https://www.investopedia.com/dow-jones-today-05142025-11734440 (5) https://www.bworldonline.com/stock-market/2025/05/13/672289/psei-climbs-to-4-month-high-after-us-china-truce/ (6) https://www.bworldonline.com/top-stories/2025/05/14/672322/us-china-trade-truce-could-provide-relief-to-philippine-markets/ (7) https://business.inquirer.net/525139/t-bill-rates-fall-across-the-board-on-dovish-bsp

Disclaimer: The purpose of this article is to inform and should not be taken as an advice or offer to purchase securities. Seek professional advice before making a decision based on this presentation. Information given does not represent the views of FWD and its agents and employees.