Latest Views



A shower of good news and less downbeat economic data suggest that the economy has surely, perhaps slowly, alighted on the recovery mode. Manufacturing PMI appeared to expand in September, inflation continued to ease to 2.3% in September, while the tax revenues dropped just beyond double-digit pace despite the lockdowns support this view. We do expect this to gain traction as the government has indicated willingness to ease COVID-19 induced restrictions in Q4, which should result in significantly greater construction and manufacturing activity as we approach the end of this dreadful 2020.



Surprisingly, positive economic data that surfaced later in August (e.g., employment, inflation, OFW, etc.) after the GDP plunge in Q2 suggest that a recovery, albeit still fairly mild, has began in earnest. The relaxation of quarantine restrictions, especially relating to public transportation and restaurants, with still tough health protocols, should reinforce this upward movement. While longer-dated bond yields continue to rise until mid September, the upside may be restrained as NG has added more than P900.0-B to its cash hoard by end-July. The equities should continue to trade around 6,000, but may exceed that in Q4 as the rebound of the economy and corporate earnings gain traction.



The PH economy appears to have bottomed out in Q2-2020 as GDP took a deep dive, while more economic data showed monthly gains. With the National Government (NG) able to raise P601.0-B in July to August 7th largely with the P516.3-B Retail Treasury Bond (RTB-24) issue, there is less pressure for it to over borrow from the domestic money market, even as long-tenor ROPs yields hit record lows. This will enable NG to step further on the accelerator on infrastructure and capital spending. We may also see the peak of inflation year-on-year (y-o-y) in August due to a low base a year ago. In sum, the rally in the bond markets will likely continue, but equities may have to wait for better earnings to get back on an upward trajectory.










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Market Outlook

Will Gov’t Sustain Fastest 2020 Pandemic Spending in Decades?

October 9, 2020


Despite the lockdown that hobbled infrastructure spending, down by 9.4% eight months into the year, government (gov’t) total spending for the period jumped 21% versus last year, same period. While there’s been a deceleration of gov’t spending in the last three months until last August, the pace of growth has never been this fast since 1995. It was only in 2018 when growth matched the current 21% upturn.

Weak Consumer Amid Higher Rates

Weak Consumer Sector Face Interest Rate Challenge

September 18, 2020


Unfortunately, interest rate upticks come at this time of still weak Philippine consumer sector based on several indicators: mobility index, consumer sentiment (reflected in a lowest reading since 2009 based on Social Weather Station survey), widespread joblessness and the still raging virus infection (increase in new daily Covid-19 cases to 3,903 in the past seven days compared to 2,593 in the first week of September).

NG Financing

Peso Yield Curve Inches Up

September 7, 2020


The country’s fiscal program has evolved faster than expected. The National Government (gov’t) budget deficit was revised higher to Php1.8T as the GDP growth forecast deteriorated to -6% based on last July’s revision by economic planners from -2% last March. The deficit came from a lower full year forecast of Php678bn this year.







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