Stocks, peso rebound on latest US jobs report, expected Fed pause

Philippine stocks rebounded Tuesday on more dovish signals from the US Federal Reserve.

The bellwether Philippine Stock Exchange index climbed 11.91 points, or 0.19 percent, to close at 6,264.07, while the broader all-shares index inched up by 6.22 points to finish at 3,386.27.

“The local stock index notched a gain on the back of remarks by top Federal Reserve officials that indicate a potential pause in rate hikes if US bond yields remain elevated,” China Bank Capital managing director Juan Paolo Colet said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the US and local stocks were expected to remain stable, provided that the Israel-Hamas conflict does not spread to other countries in the Middle East, especially the major oil-producing countries.

The peso also traded higher at 56.82 against the US dollar Tuesday, after falling to 56.95 Monday in reaction to the Middle East tension.

Meanwhile, Asia equities mostly rose Tuesday after top Federal Reserve officials suggested the recent spike in US Treasury yields could act as a substitute for further interest rate hikes.

The big gains came as oil pared the previous day’s surge, which had been fueled by supply worries after Hamas launched a deadly weekend attack on Israel. Traders are hoping the crisis does not spread to the wider, crude-rich Middle East.

Despite growing geopolitical tensions, traders have enjoyed a positive start to the week, helped by Friday’s forecast-busting US jobs report that also showed wage gains slowing — a so-called “Goldilocks” scenario in which the data was neither too weak nor too strong.

The upbeat mood was boosted Monday after Fed Vice Chair Philip Jefferson said the recent spike in US Treasury yields to multi-year highs could provide the necessary restraint on credit that would be achieved by higher interest rates.

“Looking ahead, I will remain cognizant of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy,” he told a National Association for Business Economics conference in Dallas.

His comments echoed those of Dallas Fed President Lorie Logan, who suggested that if bond market