Thailand 10 Year Government Bond vs UK Government Bond 10Y: why the prices moved differently

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  Weak economy and low inflation keep Thai rates low Thailand's economy is growing slowly and unevenly, inflation came in far below expectations, and small businesses are still struggling. That keeps the Bank of Thailand's policy rate at 1% and makes long-term bonds attractive, pushing the 10-year yield down and keeping it low.

  This is the main force holding Thai 10-year yields down despite global pressure.

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  Investors buy long-dated Thai bonds as curve flattens Fund managers, insurers and foreign investors bought Thai bonds, especially long-dated ones, as low inflation and a slowing economy made them look cheap. This demand pushes bond prices up and the 10-year yield down, flattening the gap between short and long-term rates.

  Shows the demand side that directly pulls the 10-year yield lower.

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  US yields and oil prices push Thai yields up US 10-year yields rose to around 5.3% on expected Fed rate hikes and higher oil prices, widening the gap with Thailand. That pulled the Thai 10-year yield up to about 2.39% and caused some foreign money to leave Thai bonds, pushing prices down and yields up.

  This is the main upward force on Thai 10-year yields, linking global markets to Thailand.

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  Thai yields seen range-bound as outflows stay short-term ThaiBMA expects the 10-year yield to stay in a 2.33%–2.43% range, close to the third quarter, after rising less than US yields this year. It says any foreign outflows should be short-lived because Thailand's finances and reserves are strong, and long-term bonds still drew buying.

  Gives the balanced outlook: upward pressure exists but is capped by Thailand's strengths.

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  Bank of Thailand holds rate at 1% The Bank of Thailand kept its policy rate at 1% to support the economy, with low inflation and weak SME lending. This keeps short-term yields low and signals no imminent rate hike, which supports bond prices and limits how high the 10-year yield can go.

  This is the starting point for the period and sets the low-rate backdrop that anchors Thai yields.

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  BOT Governor says rates can move either way The BOT Governor said the next move could be a hike or a cut, depending on data, and that low rates for too long carry risks. This keeps investors guessing but suggests no immediate tightening, which is mildly supportive for bond prices and keeps yields from spiking on policy fears.

  It clarifies the policy stance and reduces the chance of a near-term rate hike, which matters for long-term yields.

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  Global bond yields surge after weak US buyback A smaller-than-expected US bond buyback sent global yields soaring. Thailand's 10-year yield jumped 60 basis points to 2.29%, tracking the global move. This directly pushes TH-10Y.GB yields higher, as global yields set the reference for Thai long-term borrowing costs.

  It is the main event that drove Thai 10-year yields sharply higher in this period.

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  Foreign investors dump Thai bonds, outflows hit $635 million Foreign investors sold $635 million of Thai bonds in September, the most in six months, as US yields surged and rate-hike expectations grew. This selling pressure pushes Thai bond prices down and yields up, including the 10-year, as demand weakens.

  It shows a concrete demand shock that directly lifts TH-10Y.GB yields.

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  BoE officials signal rate hikes if energy prices stay high Deputy Governor Lombardelli and MPC member Dingra both said on 24 September that if energy prices remain elevated, the Bank will have no choice but to raise rates. Higher expected rates push gilt yields up, lowering the bond's price.

  This is a new, direct signal from BoE officials that reinforces the rate-hike narrative, pushing yields higher.

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  UK 10-year gilt auction yields highest since 1999 The UK sold 10-year gilts at an average yield of 5.383%, the highest since 1999. Strong demand (3.34x bids) shows investors are demanding higher returns, reflecting expectations of higher rates and inflation, which keeps yields elevated.

  This is a new, concrete market event showing the actual cost of UK government borrowing at multi-decade highs.

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  BoE's Mann warns inflation entrenched, fears 4% by year-end MPC member Catherine Mann said on 6 October that inflation is entrenched and could hit 4% by year-end. She has consistently voted for rate hikes. This reinforces expectations that the Bank will keep rates high or raise them, pushing gilt yields up.

  This is a new, strong warning from a key BoE official that adds to the case for higher-for-longer rates.

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  Global bond selloff pushes UK gilts above 5% A relentless global bond selloff, driven by surging US Treasury yields and inflation concerns, has pushed UK gilt yields well above 5%. HSBC notes G7 yields have risen about 1% since January. This global trend keeps UK yields elevated.

  This is a new, broad market development that directly impacts UK gilt yields through global spillovers.

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  BoE halts gilt sales, cutting supply The Bank of England unexpectedly paused all government bond sales for six months and ended long-dated gilt sales. Less supply means less pressure on prices, so gilt yields fell 6-8 basis points. This directly lowers UK borrowing costs.

  This is a new, concrete action that reduces gilt supply and pushes yields down, a key force this period.

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  BoE signals possible rate hike as inflation tops 4% The Bank held rates at 3.75% but three members voted to hike, and it projected inflation above 4% early next year. Markets now see an 80% chance of a November hike. Higher expected rates push gilt yields up.

  This is a new signal from the BoE that shifts rate expectations upward, directly affecting gilt yields.

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  Energy price surge fuels inflation fears UK natural gas and Brent crude prices jumped nearly 20% this month due to the Middle East conflict. This raises inflation risk, making the Bank more likely to hike rates, which pushes gilt yields up.

  This is a new development this period that adds upward pressure on yields via inflation expectations.

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  Banks forecast November rate hike Barclays and JPMorgan now expect the Bank of England to raise rates in November, with more hikes possible if the Middle East conflict continues. This reinforces expectations of tighter money, pushing gilt yields up.

  This is a new analyst view that confirms upward rate pressure, influencing investor expectations for gilt yields.

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  Global bond selloff pushes UK yields to 2008 high A worldwide selloff in government bonds has driven the UK 10-year gilt yield to its highest since 2008. Investors are demanding higher returns for lending to governments, which pushes bond prices down and yields up. This directly raises UK borrowing costs.

  This is the core new event of the period and directly explains the yield spike.

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  Fiscal worries: Burnham's spending plans and £11bn budget hole Prime Minister Burnham's flexible fiscal rules could mean more borrowing, and the yield surge has wiped out £11bn of the government's budget headroom. Investors fear a lack of spending discipline, so they demand higher yields to hold UK debt. This adds upward pressure on gilt yields.

  It explains the UK-specific fiscal driver behind the yield rise.

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  Bank of England signals possible rate hike to 4% BOE chief economist Huw Pill said rates may need to rise to 4% to prevent persistent inflation, and Governor Bailey linked higher public debt to higher borrowing costs. Expectations of tighter monetary policy push gilt yields up, as investors demand higher returns.

  It shows a key domestic monetary policy driver for higher yields.

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  Inflation and geopolitical risks keep upward pressure on yields The Iran war has pushed oil prices higher, adding to inflation concerns. Central banks may keep interest rates elevated for longer, which keeps bond yields high. This persistent inflation risk supports higher gilt yields.

  It explains the inflation and geopolitical backdrop that keeps yields elevated.

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