THE MORNING VIEW

THE MORNING VIEW


News Briefs
October 14, 2019
Local Key Events
  • The Bangko Sentral ng Pilipinas (BSP) announced that its Monetary Board has approved the enhanced framework for dealing with domestic systematically  important banks (D-SIBS). This is in-line with the international standards that aim to safeguard the stability of the financial system. The enhanced framework now has features that include the adoption of threshold levels and other revisions to weights of indicators and their composition, as well as calibration of additional capital requirement.
     
  • Philippine National Bank (PSE Ticker: PNB) has raised Php4.6 billion in long-term negotiable certificates of deposit (LTNCD) with a tenor of 5.5 years and an interest rate of 4.375%. The bank's offer was more than twice oversubscribed against the announced issue size of Php2 billion. Proceeds from the issue will be for business expansion and to support the bank's efforts to diversify its funding sources.
Local Indices
  • Local equities climbed as the US-China reached a partial trade deal. The US will be delaying tariff hikes on Chinese goods imports to the US while China is set to buy up to $50 billion of agricultural goods from the US. However, no agreements regarding intellectual property protections and financial services have been reached. The PSEi rose 1.09% DoD, closing at 7,849.94.
     
  • Local fixed income yields rose as optimism over positive US-China trade negotiations led to some risk-on sentiment in the market. On average, yields rose  0.47 bps DoD, led by the long-end of the curve which increased by 0.83 bps DoD. Meanwhile, yields at the short-end and the belly of the curve rose by 0.15 bps and 0.52 bps DoD, respectively.
     
  • The Philippine Peso  strengthened amidst optimism on the US-China trade talks. This is after the reports that US President Donald Trump outlined the first phase of the deal and suspended a threathened tariff hike. The USD/PHP pair closed at 51.580 (-0.12% DoD).
US and Europe Indices
  • US equities quickly advanced as news was released that a trade deal had been reached, though saw some sell-off toward the end of the day as it became clearer that the deal was limited in scope. Investors remain optimistic that this could lead to more comprehensive solutions. The DJIA closed at 26,816.59 (1.21% DoD), while the S&P 500 ended at 2,970.27 (1.09% DoD).
     
  • European equities advanced as the index tracked optimism surrounding positive trade developments and on-going Brexit negotiations. The banking sector led the rally as bank shares soared close to 5%. The MSCI Europe closed at 131.82 (2.23% DoD).
     
  • US Treasury yields closed higher as markets became more optimistic on trade talk development. On average, yields rose by 3.08 bps DoD, with the 2Y at 1.5914 (4.90 bps DoD) and the 10Y at 1.7290 (6.09 bps DoD).
     
  • The US Dollar continued to fall as investors became less risk averse due to the positive developments on the US-China trade negotiations. The DXY index closed at 98.3010 (-0.41% DoD).
Asia Pacific Index
  • Asian equities rose as the regional outlook improved on news that the trade talks between the US and China were proceeding well. While the resulting deal is considered "phase one" and limited in scope, this is nevertheless positive for sentiment. MSCI APxJ closed at 505.31 (1.56% 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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