Philippine bond yields slipped by an average of 2 basis points across the board on Tuesday, after data showed that inflation in April slowed to a 16-month low, prompting the central bank to say it has room to cut rates. But investors sold debt after yields approached their lows for the year, traders say.

"We saw some knee-jerk buying after the inflation data was announced. But yields retraced to yesterday's levels due to profit taking. The market is now more cautious because of the budget deficit concerns," a trader says.

The yield on the five-year debt fell to as low as 6.13 percent, its lowest for 2009, but inched up to 6.145 percent, traders say. Volume of trade was at 10 billion pesos by late morning, versus 21 billion for the whole of Monday.