05.08.202602:47:25UTC+00Philippines 10-Year Bond Yield Retreats

The Philippine 10-year government bond yield fell to around 7.36% in early August, extending its decline from the two-month high of 7.58% reached in late July. The move came as easing inflation reinforced expectations that the central bank will maintain a more cautious stance on monetary policy.

Headline inflation slowed for a third consecutive month in July to 6.2%, below the 6.4% consensus forecast, while core inflation eased to 4.2% after six straight months of increases. The softer price pressures gave the Bangko Sentral ng Pilipinas more space to evaluate incoming data and the effects of the 50 basis points of rate hikes implemented so far this year.

Even so, inflation remains elevated at roughly twice the pace seen in other major Southeast Asian economies, driven by higher energy costs connected to the Iran conflict and a weaker peso that has pushed up import prices.

At the same time, market focus has shifted to the release of second-quarter GDP data later this week, following a modest 2.8% expansion in the first quarter—one of the weakest growth rates in the region.