A Market Strategist at Krungthai GLOBAL MARKETS, Krungthai Bank Public Company Limited (SET: KTB), highlighted a decrease in US bond yield following recent statements from the U.S. Federal Reserve (Fed) officials supporting the possibility of an interest rate cut as early as the July FOMC meeting, along with a decline in crude oil prices after markets became less concerned about the Middle East conflict.
These factors contributed to a decrease in the U.S. 10-year bond yield, which tested the 4.30% level before rebounding to around 4.35%. This has occurred amid a risk-on sentiment in the US financial markets.
The strategist noted that the U.S. 10-year bond yield has dropped considerably and is now at a level where it is not attractive for accumulation. The expert maintains their previous recommendation that investors should wait for the US 10-year bond yield, or long-term US yields, to rise—ideally to the 4.50% level—before accumulating positions to achieve a more attractive risk-reward profile.
Regarding the Thai baht, the strategist said the recent strengthening of the currency was “beyond expectations”, driven principally by hawkish remarks from Fed officials and the faster-than-expected de-escalation in the Middle East.
However, there could still be downward pressure on the baht, especially as gold prices have retreated near support levels, providing opportunities for some market participants to buy the dips.
Overall, the improved risk sentiment, combined with less political turbulence in Thailand (after coalition parties confirmed ongoing support for the Pheu Thai Party-led government), could encourage a gradual return of foreign investors to Thai assets.
This is particularly true for the equity market, which has fallen back to levels last seen during the reciprocal tariff risks with the U.S. in early April.
Continued foreign buying in Thai assets could further support the baht’s appreciation. Still, this appreciation could be limited, as the baht has already strengthened over the past night. Most traders are now awaiting the outcome of today’s (June 25) Monetary Policy Committee (MPC) meeting before making significant portfolio adjustments.
