Thai Government Bonds Gain on U.S. Budget Deadlock; Baht Steady

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 U.S. stalled.

Stocks in the world’s largest economy fell yesterday as President Barack Obama planned to return to Washington before a year-end deadline for budget revisions needed to prevent more than $600 billion in automatic tax increases and spending cuts. The Thai Office of Industrial Economics cut its forecast today for the nation’s 2012 manufacturing growth to 2.5 percent to 3 percent, from 5 percent to 6 percent earlier, citing a slower-than-estimated recovery from last year’s floods.

“Yields have declined because of U.S. 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 percent government bonds due June 2019 fell one basis point, or 0.01 percentage point, to 3.23 percent 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 percent at the end of 2011.

Somchai Sujjapongse, head of the Thai finance ministry’s fiscal policy office, forecast yesterday that the nation’s economy will expand 5 percent in 2013, less than an earlier estimate of 5.2 percent. Global funds bought 425 million baht ($13.9 million) more local debt more than they sold yesterday, 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 percent this year, after rising 5 percent 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 percent. It fell 264 basis points in 2012.

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