(Editor's note: This article has been upadted to take out the release date of the US nonfarm payrolls report in the second paragraph.)
Credit markets posted a constructive week, supported by improving sentiment around renewed US-Iran dialogue and signs of progress toward alternative shipping routes in the Strait of Hormuz.
In sovereigns, spreads tightened early last week on opportunistic buying activity, following an initial drop in both oil prices and US Treasury yields. Indonesian sovereign and quasi-sovereigns, in particular, outperformed, as investors seemingly brushed aside concerns surrounding the resignation of the Bank Indonesia governor that weighed on sentiment the previous week. Trading remained active through midweek, supported by investors buying on price dips and favoring longer-term bonds, before turning more cautious ahead of the US nonfarm payrolls report.
Corporate credits also performed well, with Asia investment grade (IG) spreads tightening. Investors returned to both high-grade and lower-rated investment-grade issuers, particularly medium-term bonds of financial institutions. Retail activity was healthy throughout the week, with continued demand for Philippine credits and select offshore issuers such as State Bank of India, LG Energy Solution, and a few other South Korean issuers. Credit spreads remained resilient despite volatility in rates and a softer global equities backdrop near the end of the week.
Overall, sentiment improved meaningfully from recent weeks, with sovereign and corporate spreads ending modestly tighter amid stronger risk appetite and growing confidence in the credit market.
Looking ahead, market players will remain focused on the implications of the latest US labor market data and their effect on the Federal Reserve’s monetary policy moving forward. Credit spreads may continue to find support from attractive yields, although geopolitical developments in the Middle East could still drive bouts of volatility.
Against this backdrop, high-quality sovereign and investment-grade corporate credits may be favored, particularly within the front-to-belly segment of the curve or an average duration of 2 to 7 years—where risk-reward remains attractive. Investors looking for a more defensive approach may consider the shorter end of this range to mitigate exposure to interest rate risk.
Note: Rates are indicative (as of August 11, 2026) and subject to refresh.
Note: Rates are indicative (as of August 11, 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.
