Mr. Poon Panichphiboon, a strategist at Krungthai GLOBAL MARKETS, Krungthai Bank Public Company Limited (KTB), revealed that the 10-year US Treasury yield has gradually risen above the 4.80% level, following continued escalation of tensions in the Middle East. This has raised concerns about inflation among market players, leading them to increase the likelihood that the US Federal Reserve (FED) will raise interest rates twice this year. Although the 10-year US Treasury yield may rise to test the 5.00% level, it has not yet reached the break-even yield, which could be as high as 5.20%-5.30%. Therefore, KTB maintains its recommendation to gradually buy long-term US and Thai bonds, focusing on a Buy on Dip strategy, as current yield levels can absorb risks. KTB also sees a chance that the FED may return to cutting rates next year. Regarding the Thai baht, KTB views that it faces further depreciation risks, with a key resistance at 33.50 baht per dollar. If this level is breached, the baht could weaken again to test the 33.80-34.00 baht per dollar zone. However, the depreciation may be slowed by exporter selling around 33.30-33.50 baht per dollar and caution over possible intervention in the Japanese yen, which has weakened past 160 yen per dollar.
Krung Thai Bank Public Company LimitedKTB recommends buying bonds on dips as yields rise, benefiting its bond portfolio and trading income.
US 10-year Treasury yield rises above 4.80% due to Middle East tensions and Fed rate hike expectations.
