Investors may increase allocations to long-term government bonds as expectations rise for a policy rate cut by the central bank, according to Manulife Investment Management.
Jean de Castro, the firm’s head of fixed income, noted that subdued inflation and a supportive monetary policy environment are likely to sustain low bond yields, encouraging investors to extend portfolio duration.
De Castro said that the benign inflation outlook favors traditional government securities over inflation-linked alternatives, as inflation protection offers limited upside. She added that shorter-duration bonds could see reduced demand in this context.
With the Bangko Sentral ng Pilipinas (BSP) set to meet on Thursday, 28 August, de Castro pointed to July’s sharp inflation decline and Q2’s 5.5 percent GDP growth as key indicators of easing price pressures and continued economic resilience—factors that may prompt the BSP to maintain or even ease its current stance.
The upcoming inflation forecast, expected Friday, will be closely watched for signs of ongoing food price deflation, anchored inflation expectations, and external factors such as global commodity trends and weather-related risks. De Castro said these could reinforce confidence in the BSP’s policy direction and further boost fixed-income market sentiment.
