The Experts

Momentum builds amid positive signs of interest rate cuts

US job vacancies slipped to 8.06 million in the April survey, 19% lower than a year ago and the lowest level since March 2021.

FWD Investment Team

Global and Philippine Market Update

May 30 to June 5, 2023


Global Markets

Global Stocks trended higher as labor market showed signs of weakness.

  • The US Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed that the number of job vacancies slipped to 8.06 million in the April survey, 19% lower than a year ago and the lowest level since March 2021. The ratio of job openings to available workers has now fallen to 1.2 to 1, returning to pre-pandemic levels. This report provides the Federal Reserve (Fed) with further evidence of a weakening labor market, supporting the case for potential rate cuts.
  • New York Fed President John Williams stated that inflation is still too high but expressed confidence that it will start to decelerate later this year. However, he did not provide a clear indication of his stance on possible rate cuts. Williams believes the current policy is “well positioned” and “restrictive,” helping the Fed achieve its goals. Most inflation indicators are near 3%, and Williams expects inflation to drift back to 2% by 2026.


Philippine Stocks

Philippine Stocks held steady amid bargain hunting.

  • Philippine equities traded sideways due a lack of positive catalysts and uncertainty about the path of interest rates, leading investors to remain cautious about increasing their exposure to risk assets. High bond yields are diverting flows away from the equity market, while the weakening peso and the risk of rising inflation further deter investor interest.
  • The Philippine economy is expected to grow above 6% in the second quarter, driven by base effects and improved government spending, according to HSBC Global Research. Last year, the government underspent its budget during the same quarter, but this year the spending plan looks to be on track. Additionally, consumption remains robust, while investments have cooled but have not significantly declined. The National Economic and Development Authority (NEDA) has also moved to reduce tariffs on basic commodities like rice, which should ease pressure on household budgets struggling with high interest rates and inflation.


Philippine Bonds

Philippine Bond yields trended lower as inflation outlook remained within the central bank’s target.

  • Headline inflation rose to 3.9% year-on-year in May, up from the 3.8% in April, marking its highest level in six months due to faster increase in utility and transport costs, according to the Philippine Statistics Authority (PSA). However, core inflation, which excludes volatile food and fuel prices, slowed to 3.1% from 3.2% in April. This data aligns with the Bangko Sentral ng Pilipinas’ (BSP) expectations that inflation could temporarily accelerate due to adverse weather conditions. Despite this, the central bank still anticipates average inflation to settle within its 2 to 4% target for both 2024 and 2025.
  • The NEDA Board approved a medium-term plan to lower tariffs on agricultural and industrial products, including a reduction in tariffs on rice imports from 35% to 15% until 2028. This move could reduce average retail prices by Php 6 to 7 per kilo as early as July. Lowering rice prices is expected to cool inflation, as food, particularly rice, makes up a significant portion of the inflation basket.



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.