Trump and Iran Sign Framework Peace Deal in France Amid Ongoing Middle East Tensions 
Canada, British Columbia Launch $5 Billion Infrastructure Partnership to Boost Housing, Transit, and Healthcare 
German Industry Employment Falls to Lowest Level in a Decade 
Yen Near 40-Year Lows Despite BOJ Rate Hike, Markets Brace for Possible Intervention 
Asian Stocks Surge as Oil Prices Fall and Strong US Dollar Weighs on Markets 
Dollar Hits One-Month High as Hawkish Fed Outlook Boosts Greenback 
Canada Imposes 10% Tariff on Canned Vegetable Imports to Protect Domestic Industry 
Trump Says No Hormuz Strait Tolls During 60-Day Iran Ceasefire 
The Philippines peso has underperformed in comparison to its peers in the recent months. Part of this reflects increasing political concerns among foreign investors. There was also a spike in the 5Y credit default swap (CDS) spread to 117 basis points, from 84 bps in early September.
As the distortion from low oil prices dissipates going into 2017, CPI inflation should average 2.6 percent next year, up from a projected 1.6 percent this year. Coupled with the anticipated upward pressure from global rates, the higher inflation trajectory is likely to prompt the BSP to tighten its policy stance.
Meanwhile, major central banks around the world are recognizing the limits of monetary policy. With taper a consideration for the European Central Bank (ECB) and the Bank of Japan (BOJ) over the coming quarters, longer-term developed market yields are already heading higher.
Against this backdrop, the market is likely to be more discerning on fundamentals. Inflation and rate hike risks are not adequately priced into the market. Couched in an environment of rising developed market interest rates, there is considerable room for higher PHgov yields.
