Philippine bond yields stayed elevated in line with the volatility of global bond market.

The Experts

Global markets steady, finding support after last week’s retreat

Global stocks edged higher amid concerns over China’s recovery.

FWD Investment Team

Global and Philippine Market Update

Aug. 17 to Aug. 23, 2023


Global Markets

Global Stocks edged higher amid concerns over China’s recovery.

  • The US consumer price index (CPI) increased by 3.2% from a year ago in July, signaling a reduction in inflation’s hold on the US economy. Core CPI stood at 4.7%, marking its lowest level since October 2021. The data suggests substantial headway against inflation, yet the Federal Reserve (Fed) still has some ways to go to hit its 2% target. Although prices remain relatively elevated in sectors such as shelter and used cars, the rate of change remains encouraging for both consumers and the Fed. 
  • China’s economic challenges have triggered deflationary pressures, raising global concerns. The declining economic fundamentals in Beijing have become more evident in recent months, with July’s economic data falling short and the National Bureau of Statistics suspending publication of youth unemployment figures due to record-high numbers. These deteriorating fundamentals have led to deflationary pressures that might extend to developed markets, a situation that global central bankers might cautiously welcome. However, the uncertainty surrounding China’s recovery continues to cast a shadow over global markets, as a more stable China remains preferable overall.


Philippine Stocks 

Philippine Stocks retreated amid uncertainties over global economic policies.

  • The Philippine market remains affected by global headwinds. The US 10-year treasury yield has reached its highest level since November 2007, resulting in negative sentiment as equity valuations get downgraded. Furthermore, concerns over China’s underwhelming recovery have risen, given its significant role as one of the Philippine’s largest trading partners. 
  • The Bangko Sentral ng Pilipinas (BSP) anticipates that gross domestic product (GDP) will fall short of the government’s 6-7% target for this year, as well as the 6.5-8% targets for 2024 and 2025. This moderation in economic activity can be partially attributed to the higher interest rates enacted to bring inflation back to target. The subdued outlook for both this year and the following year was due to weak growth experienced in the second quarter and diminished spending as pent-up demands from the pandemic subside.


Philippine Bonds 

Philippine Bond yields stayed elevated in line with the volatility of global bond market.

  • The Bureau of Treasury (BTr) rejected bids for its latest 15-year treasury bond auction. The average rate reached 6.927% had it been awarded. This was higher than the 6.63% yield quoted for similar bonds in the secondary market. The rejection was an effort by the treasury to cap the rise in interest rates. 
  • The BSP is expected to halt its rate hikes till the end of the year. However, a sharp depreciation of the peso might compel the central bank to resume tightening measures. Given the country’s substantial trade and current account deficits, the peso will likely trend towards depreciation. Maintaining a noticeable interest rate differential between the US and Philippine policy rates could be essential to prevent a substantial depreciation of the peso. 



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

Sources: (1) (2) (3) (4) (5) (6)

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.