The Market Call | December 2021




The economic outlook for Q4-2021 and next year has brightened with more openings among firms and consumers again filled malls and restaurants, with Christmas parties and all the celebration. Besides, inflation will likely go below 4% in December and through 2022, thus fueling more spending. Headwinds, though, may slam into the Construction and Manufacturing industries, which lost jobs in October and into the Services sector which added few jobs. We expect 2021 GDP growth of 5%-6%, and improving further in 2022, spurred on by heavy election spending.


Fixed Income Market

BTr successfully issued P360.0-B of 5.5-year Retail Treasury Bonds (RTB-26) in November. Meanwhile in the U.S., the Fed announced its decision to hasten its tapering program by 3 months to March, alongside 2-3 projected policy rate hikes in 2022 to prevent 2013’s “Taper Tantrum”. Consequently, the 10-year U.S. Treasuries trekked down as players appear to have already priced in these moves. Local bond yields in 2022 will likely respond to the main catalysts -- domestic inflation and volume of government deficit/borrowing in 2022.


Equities Market

While global equities markets succumbed to Omicron-variant and inflation fears, PSEi rose by 2.1% in November, the 3rd consecutive month of gains. Property, Services and Financial sectors provided the boost even as the Holdings sector ended flat. Despite slight net buying in November, foreign investors weaved in and out of the market. The Omicron variant’s fast spread globally and the impending cuts in the Fed’s asset purchases appeared to have clouded the world economic recovery environment in November. Nonetheless, we expect PSEi to continue on an upward trend in 2022, with the expected fast GDP growth in 2022 (boosted by May Presidential elections), aided by robust consumer spending (as mall traffic surged in preparation for the Christmas season celebrations).







TMC Website post thumbnail general


Download the full report.


View all The Market Call issues.