Thailand’s Bonds, Baht Drop as Syria Tensions Deter Risk-Taking

Thailand’s government bonds fell, pushing the 10-year yield to the highest level since 2009, and the baht weakened as the prospect of U.S. military action against Syria deterred risk-taking.

The baht touched a three-year low as official data showed Thai manufacturing dropped 4.5 percent in July from a year earlier, the fourth month of declines. The price of Brent crude has risen 4.4 percent in two days on concern international oil supplies will be disrupted as the U.S., France and Britain move closer to action against Syria in response to an alleged chemical weapons attack near Damascus last week.

The yield on the 3.625 percent sovereign notes due June 2023 rose seven basis points, or 0.07 percentage point, to 4.37 percent as of 3:54 p.m. in Bangkok, data compiled by Bloomberg show. That’s the highest level for a benchmark 10-year security since November 2009.

“Geopolitical risk is worsening the market sentiment for emerging-market assets,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Thailand’s economic data remains weak, adding to downward pressure on the baht and other assets in the nation.”

Global funds sold $1.2 billion more Thai government bonds than they bought this month through yesterday and pulled a net $1.2 billion from local equities, exchange data show.

The baht fell 0.3 percent to 32.26 per dollar and reached 32.31 earlier, the weakest since Aug. 2, 2010, according to data compiled by Bloomberg. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed 12 basis points to 7.67 percent.

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