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In the Know – September 20, 2022


Overseas news

US stocks fell in early trading but closed higher, led by shares of banks and financial firms. Such companies stand to benefit from the expected rate hike from the Federal Reserve (the Fed), which it may announce in its 2-day policy meeting which starts tomorrow.


The benchmark 10-year US Treasury yield hit its highest level in over a decade and the dollar strengthened as investors remain on edge before the rate increase is announced.


In times when inflation rises fast, a central bank like the Fed can tighten its monetary policy by raising short-term interest rates. This slows down borrowing, which also affects overall spending.


Local developments

The Philippines’ Balance of Payments (BoP) deficit stood at $572 million in August, lower than the $1.819 billion deficit recorded in July.


This was driven by outflows arising mainly from the national government’s withdrawals from its foreign currency deposits with the Bangko Sentral ng Pilipinas (BSP) to settle some debt and pay for various expenses.


A country’s BoP is its record of how money has gone in and out within a certain period. It includes imports, exports, investments, and foreign donations. When more money goes out than comes in, this is called a deficit, and the opposite is a surplus.


Leechiu Property Consultants said office rental rates could drop 55% to 80% if the government decides to get rid of the remaining legitimate Philippine Offshore Gaming Operators (POGOs) in the country.


If this happens, it will mean trouble for real estate companies, including developers and Real Estate Investment Trusts (REITs), that get a lot of their income from providing office space.


Transport fares will go up effective October 4. The minimum jeepney fare will increase by 9% (lower than the 27% petitioned by transport groups) and minimum bus fares will increase 18%.


These higher transport expenses will add to the woes of consumers who are already dealing with higher prices caused by inflation.


The news doesn’t show any signs that the economic situation will drastically change anytime soon. As such, it might be best to just keep following your strategy for now.

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