Philippine two-year bonds rose, pushing down the yield by the most in more than two weeks, before a report forecast to show inflation slowed.
Consumer prices rose 4.2 percent in October from a year earlier, down from 4.4 percent in September and 4.9 percent in August, according to the median estimate in a Bloomberg survey before the data due tomorrow. The government reported a 5.2 billion peso ($116 million) budget deficit for September last week, paring the shortfall in the first nine months of the year to 31.1 billion pesos.
The yield on the benchmark two-year sovereign bonds fell 18 basis points, the most since Oct. 16, to 2.65 percent, according to a noon fixing from Philippine Dealing & Exchange Corp. The rate has dropped 33 basis points, or 0.33 percentage point, so far this quarter.
“We’ve seen an almost six-week rally driven by expectations that inflation will moderate until the end of the year,” said Jill Singian, a bond trader at Bank of the Philippine Islands in Manila.
The peso was little changed at 44.915 per dollar, prices from Tullett Prebon Plc show. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose 20 basis points to 5.97 percent.