The week ahead

Today is the 167th day of 2025. We’re 50% of the way through June, and we’re 84% of the way through Q2. The year is 45% complete. The PSEi ended the week flat. An entirely new war started over the weekend. Buckle up.

> PH:  We start the week with the big BSP rate announcement on Thursday, which is the same day that Ayala Corp lists its latest round of preferred shares [ACPB4]. Then we end the week on Friday with the payment for any Keppel [KPH] shares that were tendered.

> International:  The US Federal Reserve will make its big interest rate decision early Thursday morning, just before the BSP renders its own decision. Then, the US markets are closed on the 19th for Juneteenth (our Friday), but are back open on the 20th (our Saturday).

  MB BOTTOM-LINE:  So now that Israel has attacked Iran, we enter this week with two hot conflicts (Russia/Ukraine and Israel/Iran) that hold the potential to boil over into regional conflicts. This is a huge week for the “macros” (key investment figures) like interest rates (inflation), gold (stability), and oil (growth). US Vice President said that it would be “monetary malpractice” (there’s no such thing) for Fed Chairman Jerome Powell and the FOMC to not cut rates this week, while Trump simultaneously called for a full 100 basis point cut. But that backseat monetary driving comes at a time when inflation figures in the US have proven to be more sticky than previously thought, and when the big players like JP Morgan and Goldman Sachs think that the true impact of Trump’s inflationary tariff regime won’t be felt until the CPI data is collected “in the summer months.” Add to that the possibility of oil prices skyrocketing on any prolonged or enlarged conflict between Israel and Iran, and it seems like in a normal world, the Fed might actually be in a position to raise rates instead of lowering them. Our situation is a lot different, but while our inflation numbers have actually started to come in under the BSP’s target, the BSP has shown a frustrating hesitance to be as aggressive with rate cuts to address the cost of capital’s drag on our economic performance as it was with rate hikes to tame inflation. The banking sector is the only one that directly benefits from artificially high rates. 

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