Thailand’s bond market is under increasing pressure as rising oil prices fuel inflation fears, push yields higher, and trigger foreign capital outflows, according to Thai Bond Market Association president Somjin Sornpaisarn.
Higher energy costs are driving up production and transport expenses, lifting inflation expectations and reducing the likelihood of rate cuts. Markets are instead pricing in a prolonged high-interest-rate environment.
Bond yields have surged, with Thailand’s yield curve showing a bear steepening trend as long-term yields rise faster than short-term ones. The 10-year yield has jumped significantly, while shorter-term yields remain partly anchored by earlier policy easing.
Rising inflation is eroding real returns, prompting investors to demand higher yields and triggering bond sell-offs globally. In March, foreign investors withdrew around 30 billion baht from Thailand’s bond market amid heightened uncertainty.
The impact has also spread to corporate bonds, with lower-rated issuers facing sharper increases in borrowing costs and investors shifting toward higher-quality debt.
Overall, elevated oil prices are driving inflation, tightening financial conditions, and forcing a reset in market expectations, with investors bracing for sustained high rates and continued volatility.