Thai government bond yields eased further on Friday after lower-than-forecast March inflation and on expectations of smaller issuance in the third quarter. Thailand's benchmark five-year bond yield slipped one to two basis points to 3.49-3.50 percent in a thin afternoon session with most foreign participants sidelined by the Easter holidays.
"Yields for 5-year to 10-year maturities are weighed down by smaller new supply expectations and lower inflation in March," a Bangkok-based trader said. The Commerce Ministry said on Thursday annual inflation eased to 3.4 percent in March, below the expected 3.6 percent and against February's 3.7 percent.
A senior Finance Ministry official told Reuters on Tuesday the government would sharply cut new bond issues planned for July-September, with five-year bonds down by two-thirds, as the economic recovery had boosted tax revenue, easing the need for big borrowing.
Malaysian bonds barely moved on Friday although there was some local demand for five-year government Islamic bonds. Benchmark five-year bond yields stood at 3.71 percent compared to Thursday's close of 3.72 percent amid a yield curve that has flattened slightly since the central bank hiked rates by 25 basis points on March 4.
"It has been quiet since Singapore is closed (for the Good Friday holiday). Offshore buying has been coming INTO brstoriesthe Malaysian market quite substantially over the past few months," a local trader said. According to central bank statistics released on Thursday, foreign ownership of outstanding Malaysian government bonds has grown to about 19 percent as of February this year compared to 10 percent in June 2009. Foreign buying is likely to have risen due to a strengthening ringgit, the best-performing currency in Asia so far this year, and indications of further rate hikes in the coming quarters.
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