US Treasuries fell, with the 10-year US yield rising 0.2% to reach 3.392%. This happened as markets anticipate more rate hikes from the US Federal Reserve (the Fed) after data showed another month of solid job growth and continued labor market tightness in the US.
Bond yields rise when prices fall because an investor who bought bonds at the lower price would earn more than someone who purchased at a higher amount.
Markets sell off US Treasuries in anticipation of higher yields in the near-term, which will be driven by the Fed's rate hike. The Fed is expected to keep raising rates for as long as the labor markets are "tight" (more demand for workers but less supply of available job seekers), on the view that this scenario will keep wages, and prices of goods and services, high.
Hiking rates is one way for the Fed to combat inflation, because higher rates mean elevated borrowing costs, which may curb the demand for goods and services.
US stocks ended lower amid increasing worries that the aggressive tightening by central banks could push the global economy into a slowdown.
The general risk-avoidance sentiment was fueled by a 1.4% decline on overall US housing starts, and the survey from the Philadelphia Federal Reserve Bank which showed a slowdown in factory activity.
“Housing starts” refer to the beginning of construction for residential construction projects. These are taken to be an indicator of how an economy is doing, as the number dips when conditions aren’t good, and the opposite when things are better.
The Philippines’ December Balance of Payments (BOP) swung to a $612-million surplus from the $765 million deficit in November. That was due to a narrower trade deficit, and happened as import prices continue to soften. However, the country recorded a cumulative $7.3 billion deficit for full-year 2022.
The BOP is the difference between the money entering a country and the amount leaving that country during a certain time period. A surplus in BOP isn’t automatically a good thing, and a deficit is not always bad.
President Ferdinand Marcos Jr. has approved zero tariff on electric vehicles for five years under Executive Order No. 12. to encourage consumers to use cleaner and greener cars.
Given the current limited availability of pure-electric vehicles in the country, this move may not have a significant effect on the government’s tax income for the period.
The latest news doesn’t hint that big changes may happen soon, and so you may want to hold off on making significant changes to your investments for the meantime.