Philippine vs US 10-year yield gap: 262 bp wider, peso weaker — does the spread explain USD/PHP?
The Philippine 10-year yield has been above the US 10-year in every month since 2007, and the gap widened to 262 basis points in August 2026. The peso weakened anyway. What the data say about the gap and the exchange rate, and what they do not.
Textbook logic says money flows toward higher yields, so a market that pays more than the United States should see its currency supported. The Philippines has paid more than the United States on 10-year government bonds in every month since 2007. In 2026 the gap widened by about three-quarters of a percentage point, and the peso still fell to record lows.
How far is the Philippine 10-year above the US 10-year?
By 262 basis points in August 2026, using monthly averages. On 7 October 2026 the Philippine 10-year closed at 7.99% (ADB AsianBondsOnline, data: Bloomberg) and the US 10-year at 5.28% (US Treasury), a gap of about 271 basis points.
Philippine 10-year minus US 10-year, August 2026 monthly average. Peso per dollar that month: ₱61.45
The two daily figures come from different sources and different closing times, so treat the daily gap as approximate.
Has the Philippines ever paid less than the United States?
No, not in this data. Across 234 months from March 2007 to August 2026, the gap was positive every month.
| Measure | Value |
|---|---|
| Months compared | 234 (March 2007 to August 2026) |
| Months with the Philippines below the US | 0 |
| Smallest gap | 87 bp (August 2013) |
| Largest gap | 563 bp (July 2008) |
| Latest gap | 262 bp (August 2026) |
The smallest gap came in 2013, when Philippine 10-year yields fell below 4% and the US yield was rising during the “taper tantrum”. The largest came in mid-2008, when Philippine inflation was running near 10%.
Does the gap explain the exchange rate?
Not well. This site compared the monthly gap with the monthly average peso per dollar rate.
| Comparison | Correlation |
|---|---|
| Gap vs USD/PHP level, March 2007 to August 2026 | −0.11 |
| Gap vs USD/PHP level, 2016 to August 2026 | −0.10 |
| 12-month change in gap vs 12-month change in USD/PHP | +0.39 |
The level correlations are close to zero: knowing the size of the gap tells you almost nothing about where the peso was. The change correlation of +0.39 means that over 12-month windows, a widening gap more often came with a weaker peso, not a stronger one. One reading is that the Philippine yield partly carries a risk premium: when investors demand more to hold Philippine assets, both the yield gap and USD/PHP tend to rise. That is an interpretation of a moderate correlation, not proof of a cause.
The 2026 path: gap wider, peso weaker
The 2026 path: gap wider, peso weaker
10-year gap over US
Shared linear scale from zero. Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Month | 10-year gap over US | USD/PHP (monthly average) |
|---|---|---|
| December 2025 | 185 bp | ₱58.88 |
| January 2026 | 183 bp | ₱59.19 |
| February 2026 | 182 bp | ₱58.18 |
| March 2026 | 243 bp | ₱59.59 |
| April 2026 | 239 bp | ₱60.32 |
| May 2026 | 301 bp | ₱61.38 |
| June 2026 | 274 bp | ₱61.18 |
| July 2026 | 272 bp | ₱61.60 |
| August 2026 | 262 bp | ₱61.45 |
The gap jumped in March, when Philippine yields rose after the start of the Middle East war, and peaked at 301 basis points in May. Over the same months the peso weakened from about ₱58.9 to ₱61.4 per dollar. In February the gap barely moved while the peso strengthened, and in May the largest gap of the year came with the weakest monthly average to that point.
The daily rate went further. The peso closed at a record low of ₱62.90 on 8 October 2026, down 6.53% from its close on 29 December 2025, according to Bankers Association of the Philippines data reported by BusinessWorld.
When could the gap matter more?
The economists quoted on the record-low day named other drivers: oil above US$100 a barrel raising the import bill, the Federal Reserve’s higher-for-longer stance and high US Treasury yields, and gross international reserves slipping to US$99.997 billion at end-September. The yield gap was not among them.
| Factor | Latest figure | Date |
|---|---|---|
| Philippine inflation | 7.2% | September 2026 |
| Gross international reserves | US$99.997 billion | end-September 2026 (preliminary) |
| Electronics share of exports | 58.8% (US$4.79 billion) | July 2026 |
| Total exports, January-July | US$54.92 billion, +12.9% | 2026 |
A higher yield attracts money when investors expect it to more than cover inflation and currency losses. With inflation at 7.2%, the real Philippine 10-year yield in September was only about +0.30 points, so the headline gap overstates the real advantage. The gap could matter more if inflation falls while yields stay high, or if global risk appetite returns. Export strength, led by electronics at 58.8% of July exports, supports the peso through trade flows rather than through bond yields.
See what the weaker peso means for an amount — the past money calculator compares a past peso amount through prices, money supply and the exchange rate.
Open the past money calculator →
What are the limits?
The Philippine series is ADB AsianBondsOnline with Bloomberg as the data source; the US series is the US Treasury par curve. Monthly figures are averages of daily closes and the exchange rate is a monthly average, so a single day can look very different. The correlations are computed over overlapping 12-month windows, which inflates how consistent they look. None of them show that the yield gap moves the peso or the other way round.
Questions & answers
Has the Philippine 10-year yield ever been below the US 10-year?
Not since March 2007, where this series begins. The smallest monthly gap was 87 basis points in August 2013 and the largest 563 basis points in July 2008.
If Philippine bonds pay more, why is the peso weak?
A higher yield is one input among many. In 2026 the peso has also been shaped by oil prices above US$100 a barrel, US yields at their highest since the early 2000s, a strong dollar and Philippine inflation of 7.2%. A higher yield that partly reflects higher inflation and risk does not have to attract money.
Does a wider gap cause the peso to weaken?
The data do not show that. Over 12-month changes since 2007 the gap and USD/PHP moved together with a correlation of +0.39, which means they often moved in the same direction. Both can be driven by the same shocks, such as inflation or global risk aversion.
Which exchange rate is used?
Monthly averages of the peso per US dollar held on this site, from the BIS bilateral exchange rate series. The 8 October closing rate of ₱62.90 is the Bankers Association of the Philippines close reported by BusinessWorld.
Source
- ADB AsianBondsOnline - Philippines (10-year LCY government bond yield; data: Bloomberg) ↗
- US Department of the Treasury - Daily Treasury Par Yield Curve Rates ↗
- BIS - Bilateral exchange rates ↗
- CapsWindow - Data & methodology ↗
- BusinessWorld - Peso plunges to new all-time low close on contagion, oil supply fears (8 October 2026) ↗
- SunStar - PH exports hit $54.92B, 35-year high (PSA data, July 2026) ↗
- PSA - International merchandise trade statistics, July 2026 (preliminary) ↗