Thailand's government bonds rose, sending the seven-year yield to the lowest level in more than two weeks, as demand for safer assets increased after budget talks in the United States stalled.

Stocks in the world's largest economy fell on Wednesday as US President Barack Obama planned to return to Washington before a year-end deadline for budget revisions needed to prevent more than US$600 billion in automatic tax increases and spending cuts.

Fiscal Policy Office director general Somchai Sujjapongse forecast on Wednesday that Thailand's economy will expand 5% in 2013, less than an earlier estimate of 5.2%.

"Yields have declined because of US uncertainties," said Julia Goh, an economist at CIMB Investment Bank Bhd in Kuala Lumpur. More investors are "seeking safer assets such as government bonds," she said.

The yield on the 3.875% government bonds due June 2019 fell one basis point, or 0.01 percentage point, to 3.24% as of 8.52am in Bangkok, the lowest level since Dec 10, according to data compiled by Bloomberg. It fell five basis points this month and was at 3.25% at the end of 2011.

Global funds bought 425 million baht ($13.9 million) more local notes more than they sold on Wednesday, according to data from the Thai Bond Market Association.

The baht was little changed at 30.66 per dollar, according to data compiled by Bloomberg. It appreciated 2.9% this year, after rising 5% in 2011.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 33 basis points to 3.88%. It fell 264 basis points in 2012.

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