Short-term Thai government bond yields eased on Friday, boosted by central bank purchases in the secondary market, but ten-year yields hovered around 1-year highs on worried that the government may overshoot its fiscal deficit target. Two-year bonds, which were most actively traded were yielding 2.33 percent, five basis points below Thursday's close, Bangkok-based traders said.
Five-year bond yields were down three basis points to 3.92 percent. According to the central bank website, it purchased 1.9 billion baht ($57 million) of bonds on Friday. Ten-year bond yields was broadly unchanged around 4.50 percent on Friday after having risen by more than 35 basis points over the past month. According to Thai bond market association data, foreigners sold more than a net 2 billion baht ($60 million) of bonds, up from last week's sales of 1.5 billion baht.
They were net sellers of 17.8 billion baht worth of bonds in October. DBS said the yield curve will steepen and the spread between 1-year and 10-year bond yields will widen to 300 basis points from 230 basis points as long-term yields will be pressured by fiscal deficit worries.
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