THE MORNING VIEW

THE MORNING VIEW


News Briefs
December 14, 2018

Local Key Events
  • The Bangko Sentral ng Pilipinas (BSP) announced the approval of the countercyclical capital buffer (CCyB) as a new preventive tool to better manage funding risk. The CCyB will be on top of the capital adequacy ratio, which requires big lenders to hold on to at least 10% of their risk-weighted assets at all times.
     
  • PLDT, Inc.'s wireless unit, Smart Communications, Inc., said that it rolled out its long-term evolution (LTE) and LTE-Advanced (LTE-A) network in several towns in Bulacan. Smart noted that it was able to record speeds between 40 megabits per second (Mbps) and 70 Mbps when it tested the network using LTE-A capable devices in locations such as Malolos, San Rafael and Santa Maria.
     
Local Indices
  • The local equities market continued to rise amid the market's optimism on the possible resolution to the US-China trade war. Financials led the climb by 1.27% followed by services with 1.06% gain. The PSEi closed at 7,522.92 (+0.46% DoD).
     
  • Local fixed income yields remained flat with a slight upward bias as expectations of a pause in interest rate hikes were confirmed. Moreover, the BSP conveyed more confidence that inflation for 2019 and 2020 will be within target. On average, the curve rose 1.26 bps.
     
  • The Philippine Peso remained flat as market participants await the BSP's announcement on its benchmark rates during the last policy meeting for 2018. The USD/PHP pair closed at 52.62 (-0.18% DoD).
     
US and Europe Indices
  • US equities were mixed despite positive developments on the trade front as China purchases more soybeans from the US. Trade optimism is starting to fade after a few days of gains. The Dow Jones index closed at 24,597.38 (+0.29% DoD) while the S&P 500 ended at 2,650.54 (-0.02% DoD).
     
  • European stocks slightly fell after the ECB decided to halt its asset purchase program and gave a less optimistic outlook on the economy moving forward. The MSCI Europe ended at 118.28 (-0.14% DoD).

     
  • US Treasury yields steepened as the short-end of the curve declined while the long-end rose. The decrease in short-end yields is partially due to the market discounting fewer Fed hikes while the rise in the long-end is due to strong initial jobless claims data. On average, yields fell 0.23 bps, with the 10-year rising 0.35 bps to 2.9131%.  
     
  • The US Dollar was relatively flat due to the offsetting impact of a swelling US budget deficit and a weakening euro after the ECB's less positive outlook on the EU economy.  The DXY ended at 97.0640 (0.02% DoD).
Asia Pacific Index
  • Asian stocks bucked the trend and closed in the green as investors were upbeat on China's moves to fulfill its promises with regard to trade. The MSCI APxJ rose to 488.47 (+0.76% DoD).
     
Sources: BPI, Business World, PDI, Phil Star, Manila Bulletin, Reuters, Briefing, Bloomberg, CNN, Dow Jones, The Wall Street Journal, CNBC
 

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