Thailand’s bonds rose, with the five-year yield dropping the most this week since November, as concern that global recovery is losing momentum boosted demand for the relative safety of government debt.
Ten-year US Treasury yields fell to the lowest level since May 2013 this week, while St Louis Fed President James Bullard said on Thursday the central bank should consider delaying the end to its bond-buying programme.
Thai exports, which account for about two thirds of the US$387 billion economy, posted the biggest contraction in August since November 2011.
“There is rising concern that any further slowdown in global growth will worsen the Thai economic outlook,” said Thammarat Kittisiripat, an analyst at TMB Bank. “The domestic economy has already been significantly affected by the drop in exports.”
The yield on the 3.875% government notes due in June 2019 dropped 15 basis points, or 0.15 percentage point, to 2.65% from Oct 10 as of 10.45am, according to data compiled by Bloomberg. That was the biggest decline since Nov 29. The yield fell one basis point on Friday.
Overseas shipments decreased 7.4% in August from a year earlier, the Commerce Ministry reported on Sept 29. Exports to the nation’s biggest trading partners of China, the United States, Japan and Europe all saw a contraction. The World Bank forecasts the Thai economy will expand 1.5% this year, the least since 2011.
In the currency market, the baht advanced 0.1% on Friday and was little changed for the week at 32.458 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected exchange-rate swings used to price options, rose 21 basis points from Oct 10 to 5.13% and climbed five basis points on Friday.
One-year interest-rate swaps fell two basis points this week to 1.90%, below the central bank’s benchmark 2% policy rate. The contracts reached 1.85% on Thursday, the lowest level since June, data compiled by Bloomberg show.