Global credit markets opened last week with soured risk sentiment following re-escalating tensions in the Middle East. All throughout the week, spreads steadily widened as both the US and Iran resumed attacks and threatened safe passage along the Strait of Hormuz. Selling activity dominated flows across the curve, as rising oil prices to pre-peace-talk levels and the situation's unpredictability pushed investors to de-risk.
Even the cooler-than-expected US June inflation figures, as reflected in the consumer price index (CPI) and producer price index (PPI), did little to stabilize sentiment, despite markets now expecting the Federal Reserve to keep policy interest rates unchanged at its July 28-29, 2026 meeting.
Overall, sovereign spreads ended the week 5-20 basis points (bps) wider, with Republic of the Philippines (ROP) sovereign bonds performing slightly better than Indonesia's, supported by strong demand from local retail investors.
Asia investment-grade (IG) corporate spreads ended the week 5-20 bps wider. However, Philippine corporate names continued to see strong retail interest in front- and belly-maturity papers, particularly bank bonds and other notable corporates such as Megaworld and ICTSI. Cash prices ended mixed at +/- 0.5 points, tracking the recent range-bound price action of US Treasuries.
Looking at the week ahead, credits will likely continue to take cues from developments in the Middle East, global oil prices, and movements in US equities, which have recently seen rotations out of technology and artificial intelligence names. Currently, with spreads at more attractive levels, we are becoming more constructive on bonds in the 5- to 10-year part of the curve.
On the other hand, defensive investors in front-end securities may see potentially capped gains amid ongoing debate about what the next Fed move will be. Overall, an average duration of 2-7 years may be appropriate to capture these benefits while still managing interest rate sensitivity risks.
Note: Rates are indicative (as of July 21, 2026) and subject to refresh.
Note: Rates are indicative (as of July 21, 2026) and subject to refresh.
For more information on foreign currency-denominated bonds, you may reach out to your Wealth Specialist or log in to Metrobank Wealth Manager.
DANA LOUISE GERONIMO is an Investment Counselor at Metrobank under the Institutional Investors Coverage Division. She built her expertise through her previous roles as an Investment Specialist and as a Financial Markets Sector Management Trainee within the bank. Dana holds a Master’s degree in Industrial Economics from the University of Asia and the Pacific. Outside of work, she enjoys exploring different fitness centers and reading.
