The Philippines’ 10-year government bond yield surged toward 8%, hitting its highest level since late October 2018, as faster inflation and softer demand at government debt auctions weighed on bonds. Headline inflation accelerated to 7.2% in September from 6.1% in August, overshooting forecasts of 6.6% and matching April’s three-year high. The reading boosted expectations for another interest-rate increase by the Bangko Sentral ng Pilipinas, after policymakers already raised rates three times this year. Additionally, the peso has weakened about 6% so far, increasing imported-inflation risks. Elevated oil and food prices, along with risks from an El Niño-related drought, could prolong inflationary pressures, reinforcing expectations for a longer restrictive monetary policy stance. Meanwhile, demand for government debt has weakened, with the bid-to-cover ratio at a September five-year bond auction falling to 1.22, the lowest for the tenor since 2013.