DISCLAIMER INFORMATION:

The report above is circulated for general information only. The opinions expressed are solely those of the contributors and are based on prevailing market

conditions and public sources that are believed to be reliable. Metrobank and the report contributors/support staff do not make any guarantees or representation as

to the accuracy, completeness or suitability of this report. The report may contain confidential or legally privileged material and may not be copied, redistributed, or published without prior written consent. Opinions or strategies contained in this publication may change without prior notice and should not take the place of

professional investment advice or sound judgment on the part of the reader.

PESO GS market traded higher since the start of last week but pared some of the losses towards last Friday to close the week 7-10 bps higher. The GS market was mainly driven by moves in the U.S Treasury market. Last Thursday, the BSP left all their policy rates unchanged as expected by the market. The BTR announced that they will be re-issuing 10-59 for their 10-year auction on Feb 17. Total outstanding issue will now be at 165Bn. Market indication is at 3.50 - 3.65. Outlook Expect the GS market to remain volatile in the near-term but mostly following moves in the U.S treasury market. A possible new supply of 25B coming in may be coming in from the 10-year treasury auction.

PDST-R1

Tenor 16-Feb-15 9-Feb-15 Change

3 mos 3.8450 1.8536 1.9914

6 mos 3.6916 1.7165 1.9751

1 Yr 2.6750 2.0801 0.5949

2 Yrs 2.7697 3.0888 -0.3191

3 Yrs 3.5194 3.4625 0.0569

4 Yrs 3.7289 3.6224 0.1065

5 Yrs 3.5944 2.9150 0.6794

re

Dollar-Peso US January Nonfarm Payrolls rose by 257k, higher than market expectation of 228k. The December figure was adjusted to 329k from 252k. The Job Openings and Labor Turnover Survey (JOLTS), part of what the Fed monitors closely for forward guidance, rose to 5.028 million in December showing further incremental labor market improvement. However, retail sales printed lower at -0.8% vs. expected -0.4%, Initial Jobless Claims of 304,000 vs 287,000 which led weakening of the dollar overnight against its counterparts. Some hawkish statement from Fed officials came out saying that a rate increase is closer and closer and that June looks like the attractive option for a rate hike. US 10-year yields reached a high of 2.0469% in a reaction to risk-off sentiment as Putin announces Ukraine Cease-fire to begin February 15, yields went right back down to a low of 1.96% due to bad US data. Headlines regarding Greece made EURUSD trading very choppy during the NY session as reports say that Greece will stay in the EU bailout program, with an agreement in principle reported being reached. However, another headline made its way to the wires indicating that no agreement has been reached, and that Greece will not accept an extension. EURUSD saw lows of $1.1280, shot up to $1.1352, then back down again close to $1.1300 as the headlines were released. USDJPY touched $120.48 on comments by the BOJ that it will continue easing to achieve price stability. It was also the biggest mover last week, trading down to a low of 118.75 on the back of BOJ announcing extra stimulus as counterproductive for now. Oil prices dropped 4% as the IEA warned oil stocks could reach all-time highs this year. Brent fell below $57/barrel and WTI hit lows of $49.91/barrel. AUD Unemployment Rate worse-than-expected at 6.4% vs. expected 6.2%. This led the pair to a drop from 0.7728 to 0.7660. Outlook Given the mixed US data releases lately, players are becoming more tentative on their directional views creating a very choppy market. In the local space, the 44.000 44.500 range has been intact as combination of corporate demand and dollar liquidation is keeping up within this range.

Interest Rates

Weekly Views from the Metro

From the Trading Desk

February 16-22, 2015

Highlights Some hawkish statement from Fed officials came out saying that a rate increase is closer and closer and that June looks like the

attractive option for a rate hike. The BSP left all their policy rates unchanged as expected by the market.

Also, from the Research Desk:

Growth in exports 2014 remittances up 5.8%

Foreign Exchange

DISCLAIMER INFORMATION:

The report above is circulated for general information only. The opinions expressed are solely those of the contributors and are based on prevailing market

conditions and public sources that are believed to be reliable. Metrobank and the report contributors/support staff do not make any guarantees or representation as

to the accuracy, completeness or suitability of this report. The report may contain confidential or legally privileged material and may not be copied, redistributed, or published without prior written consent. Opinions or strategies contained in this publication may change without prior notice and should not take the place of

professional investment advice or sound judgment on the part of the reader.

Metro Research Central From the Metrobank Research Desk

The recovery of world trade in 2014 was seen as modest, coming from a lackluster performance in 2013. Despite the upturn in the US economy, the weakness in the Eurozone continued to be a drag to global trade. Full-year 2014 growth for Philippine merchandise exports came in at 9% year-on-year to reach a total of $61.8 Bn. Electronic products continue to account for bulk of the total export revenues.

Despite the gloomy global macroeconomic backdrop, the outlook is for global trade to improve this year amid the strengthening US economy and falling oil prices. Furthermore, the sustained growth in the ASEAN region is seen to support global trade. In the Philippines, goods exported to the ASEAN member countries account for 15.3% of total exports in December 2014 alone. Remittances coursed through banks closed at a record USD2.3 billion in December, bringing remittances for the year at USD24.3 billion. Year-on-year growth is steady at 5.8%, within Metrobank Research forecast, considering muted global growth and a high 2013 base. Top remittance sources continue to be the US, Saudi Arabia, and United Arab Emirates. The robust growth in remittances is seen to support higher consumption. Based on the latest Consumer Expectations Survey (4Q2014), the percentage of OFW remittance recipients who use the money for food, education, and savings have increased on a quarter-on-quarter basis.

(Continued on next page)

* The views and opinions expressed in this article are solely those of the author and/or Metrobank Research. As such, this article does not necessarily reflect an official position taken by Metrobank, its Directors and officers, or its subsidiaries.

Growth in exports By Pauline Revillas, Research Analyst

Market Sales Desk: Elaida A. Bellon, FVP

Head, Investment Distribution Division

898-9960

May Vera Fe O. Tereul

Sales Management Assistant

898-8924

Ricardo N. Pedrosa, FVP

Head, Sales and Structuring Division

898-9929

Elizabeth B. Legaspi, AVP

Head, Commercial Sales Department

898-8926

Support Officer:

Fatima Shaneen A. Bara

Office of the Treasury Group Head

(632) 898-9983

2014 remittances up 5.8% By Mabellene Reynaldo, Research Analyst

USD US equities rallied again last week on the back of somewhat easing geopolitical risks from Greece, Russia, and Ukraine as well as a stable rise in oil prices. Sentiment at the start of the week was also lifted by the previous weeks very good employment numbers. The S&P was up 2% week-on-week while crude prices were up 2% as well. Interestingly, economic data from the US last week disappointed with both retail sales and the University of Michigan Sentiment index posting worse-than-expected figures. Elsewhere, European stocks were also up 1.5% while Asian stocks were little changed week-on-week. US Treasuries again sold off with the long-ends underperforming as headline risks were undermined and as markets digested the better-than-expected employment figures from the US. The treasury curve bear steepened with the 30- and 10-yr up 12 bps and 9 bps while the 5-yr was up 6 bps while the year was unchanged. HY sovereigns followed the move in US treasuries although spreads have tightened but still off the tights seen before the December sell-off. ROPs and INDONs long-end took the brunt of the sell-off as traders price in further sell-offs in US treasuries. Again, INDON bellies outperformed the rest of the curve as well as INDON quasi sovereigns which are reacting positively to the rise in oil prices. IG spreads tightened significantly with financials, tech. names and property outperforming. Expect market to continue to follow the move in US treasuries. The start of the Chinese long holiday though would keep players on the sidelines and expect markets to be illiquid. Outlook With rates going higher, expect Treasuries to enter a new trading range, amid expectations of an earlier rate increase. CT10s support is now seen at 2.03% then another at 2.10% while heavy resistance is seen at 1.92% and 1.82%. Expect credit to remain supported although headline news from either a breakdown in the bailout talks with Greece or a sudden end to the ceasefire between Ukraine and Russia could cause some volatility.

Source: Philippine Statistics Authority

DISCLAIMER INFORMATION:

The report above is circulated for general information only. The opinions expressed are solely those of the contributors and are based on prevailing market conditions and public

sources that are believed to be reliable. Metrobank and the report contributors/support staff do not make any guarantees or representation as to the accuracy, completeness or

suitability of this report. The report may contain confidential or legally privileged material and may not be copied, redistributed, or published without prior written consent. Opinions or strategies contained in this publication may change without prior notice and should not take the place of professional investment advice or sound judgment on the

part of the reader.

1,200

1,400

1,600

1,800

2,000

2,200

2,400

Jan

Fe

b

Ma

r

Ap

r

Ma

y

Jun

Jul

Au

g

Se

p

Oct

Nov

Dec

OFW REMITTANCES USD million

2012 2013 2014

Expect remittances to continue supporting the economy despite global headwinds. The improving US economic performance will provide support for stable inflows despite weakness in other advanced economies. Expect consumption to remain steady given sustained remittance flows and manageable inflation. Metrobank Research expects OFW remittances to climb between 6-7% y-o-y this 2015.

Local equities edged higher on the back of optimism as we enter 4Q earnings season. The Philippine Stock Exchange index (PSEi) gained 45.3 points (+0.6%) to end at 7,773.45. Services (+1.0%) led all sub-sectors, followed by Industrials (+0.8%) and Holding Firms (+0.3%). Index gainers were led by SM Prime (+3.5%), PLDT (+3.2%), and URC (+2.8%). Decliners were led by Bloomberry (-5.0%), Alliance Global (-3.8%), and San Miguel Corp (-3.3%). Average daily value turnover reached P9.0bn (US$202.8mn). Foreigners were net buyers by P3.8b; estimated foreign participation rate was 71.3% of total turn-over. Companies should be releasing 4Q/FY14 earnings results in the coming weeks. On account of strong economic performance (as seen in 4Q GDP), expect earnings to be robust for most sectors. Elsewhere, news flows coming from Western markets may likewise impact sentiment. Technical indicators also point out to weakening momentum in the short term.

Weekly Outlook/Summary By Ghia Yuson, Research Analyst Bruce Lopez, Equity Sales Associate Institutional

The PSEi ended higher for an 8th straight week and now

looks to test its resistance levels from 7,800 (R1) to 7,830 once again.

Short term supports may now be raised to 7,582 (S2) and its gap from 7,630 to 7,650 (S2).

MACD momentum, however, would still need to pick up in order to confirm a strengthening uptrend.

PSEi Chart

Research Department:

Ildemarc C. Bautista, CFA

Head of Research

Pauline E. Revillas

Research Analyst Mabellene B. Reynaldo

Research Analyst

Email: research@metrobank.com.ph

Views on the Stock Market: From the Research Desk of

Source: Bangko Sentral ng Pilipinas

* The views and opinions expressed in this article are solely those of the author and/or Metrobank Research. As such, this article does not necessarily reflect an official position taken by Metrobank, its Directors and officers, or its subsidiaries.

Source:

First Metro Securities Brokerage, Corp.

(632) 859-0655

www.firstmetrosec.com.ph