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Thailand’s Bonds Fall as Investors Reduce Holdings; Baht Gains

Nov. 6 (Bloomberg) -- Thai government bonds declined after international investors reduced their holdings amid speculation the global economy is recovering. The baht strengthened.

The five-year yield rebounded from its lowest level since January after a report yesterday showed service industries in the U.S. kept growing in October. Global funds sold $45.8 million more of Thai sovereign notes than they bought yesterday while pouring a net $16.6 million into the stock market, according to data from the Thai Bond Market Association and the stock exchange.

“Recent data are indicating that global economic conditions are stabilizing, improving investors’ risk sentiment,” said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. “The local bond market may be seeing just a correction after the recent decline in yields.”

The yield on the 3.25 percent notes due June 2017 rose one basis point, or 0.01 percentage point, to 3.01 percent as of 3:12 p.m. in Bangkok, according to data compiled by Bloomberg. The rate reached 3.005 percent yesterday, the lowest level since Jan. 10.

The Institute for Supply Management’s non-manufacturing index was 54.2 last month, compared with 55.1 in September, the Tempe, Arizona-based group said yesterday. A measure above 50 signals expansion in industries that account for almost 90 percent of the economy. The October figure exceeded the third-quarter average.

U.S. voters decide today between giving President Barack Obama another four years in office or replacing him with Republican challenger Mitt Romney. Obama led Romney 50 percent to 47 percent in a survey of 2,345 likely voters conducted Nov. 1-4 by ABC News and the Washington Post.

The baht rose 0.1 percent to 30.79 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 4.27 percent.

To contact the reporter on this story: Yumi Teso in Bangkok at yteso1@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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