Investors seen turning to Long-Term Bonds Amid Easing Rates

Manulife Investment Management and Trust Corp. said investors may shift more toward longer-duration government securities as subdued inflation and supportive monetary policy create favorable conditions for fixed-income markets.

Jean Olivia de Castro, head of fixed income at Manulife, noted that bond yields are expected to stay low with the Bangko Sentral ng Pilipinas (BSP) likely to cut policy rates further. “This environment is expected to reinforce positive sentiment in the fixed-income market and encourage strategic positioning toward longer-term assets,” she said in a research note.

She added that demand for plain government bonds is likely to strengthen as investors seek to lock in yields, while interest in inflation-linked securities may ease given limited upside. Shorter-duration bonds may also see weaker demand amid the current market backdrop.

The outlook is backed by July’s sharp decline in inflation and the 5.5 percent GDP growth posted in the second quarter, which de Castro said gives the BSP more room to ease rates. “The BSP will likely prioritize balancing support for growth with the need to ensure price stability, while also monitoring external risks and financial sector conditions,” she said.

The BSP is expected to release its updated inflation forecast this week, with market watchers keeping an eye on food price deflation, global commodity movements, and weather-related risks. If these trends persist, de Castro said, investor confidence in the fixed-income market could further strengthen.