{"id":323445,"date":"2023-05-31T00:33:15","date_gmt":"2023-05-30T16:33:15","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323445"},"modified":"2024-07-28T23:55:49","modified_gmt":"2024-07-28T15:55:49","slug":"peso-us-fed-rate-hike","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/peso-us-fed-rate-hike\/","title":{"rendered":"Peso back at P56 : $1 after Fed signals of another interest rate hike"},"content":{"rendered":"\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Analysis and Recommendation<\/h2>\n\n\n\n<p>The decision by the U.S. Federal Reserve weeks ago to finally pause its rate hikes allowed the market to breathe a sort of collective sigh of relief. With Fed rates capped at the 5.00-5.25% mark, this would allow the Bangko Sentral ng Pilipinas (BSP) to ease up on its own tightening activities and would at last bring some much needed stability to the rate environment.  <\/p>\n\n\n\n<p>We note, however, that the current slew of economic data releases ran contrary to expectations. To start off, the US economy and labor market continued to showcase resiliency, with the former being revised upwards to a higher than expected 1.3%. Meanwhile, initial jobless claims and the 4-week average for jobless claims (indicators of employment strength), were both below estimates at 229,000 and 231,750, which further indicated that the potential for wage-driven inflation was still strong. <\/p>\n\n\n\n<p>With core Personal Consumption Expenditures (PCE) prices coming in hot, these may provide ammunition for the Fed to once again resume hiking, despite the seemingly less hawkish rhetoric seen in their recent meeting minutes. <\/p>\n\n\n\n<p>We note that currently, expectations for another 25bp hike have risen sharply, now at over 50%. What does this mean for the PH market? To start off, the increasing likelihood of action from the Fed has caused the USDPHP to spike above the P56.00 mark. This may therefore lead to further volatility in the market.<\/p>\n\n\n\n<p>If the Fed does indeed move rates by another 25bps, then this would bring the spread between Fed and BSP rates back down to 75bps which is the same level we saw when the USDPHP hit its all-time high last year. This in turn would likely lead to another round of increases for BSP rates, as the central bank will be forced to move to shore up the peso. <\/p>\n\n\n\n<p>Given this, we would therefore steer clear of companies with high exposure to the USD in terms of import requirements such as CEB and GTCAP. PCOR would also be affected by the higher cost of procuring crude oil. Companies with a high proportion of USD-denominated debt such as ACEN, SMC, and JFC would also see added pressure on their bottomlines. <\/p>\n\n\n\n<p>For our picks, we would favor consumer companies that would benefit from the higher peso-value of OFW remittances such as MONDE and RRHI. Exporters such as DNL may also see increased demand for their products.<\/p>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:16px\"><em><em>This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about <a href=\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/our-partner-brokers\/\">our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-323445","post","type-post","status-publish","format-standard","hentry","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323445","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=323445"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323445\/revisions"}],"predecessor-version":[{"id":323447,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/323445\/revisions\/323447"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=323445"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=323445"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=323445"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}