(Bloomberg) -- Offshore selling of Thai government bonds may extend as political risks mount and the central bank damps prospects of further interest-rate cuts.

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Foreign funds have pulled over $850 million from baht bonds in October, set for the biggest monthly outflow since August last year, according to Thai Bond Market Association data. The trend is likely to persist with abrdn plc seeing better value in other markets, while Krungthai Bank Public Co. expects benchmark yields to stagnate between 2.4% to 2.3% through to year-end. They closed at 2.4% on Tuesday ahead of a public holiday.

The Bank of Thailand signaled Tuesday that it won’t rush to follow up on last week’s surprise interest rate cut, despite government pressure to ease policy further. In contrast, sovereign bonds in neighboring Malaysia are expected to attract foreign interest as the government advances its fiscal reforms.

“Looking at where the yield levels are and a bit more constructive on currency, we probably prefer Malaysia than Thailand,” said Pongtharin Sapayanon, head of Thailand fixed income at abrdn in Bangkok. The market is pricing a 50% chance of another BOT cut so “there’s not much juice left in current yield levels,” he said in an interview.

Returns on Thai bonds for dollar-based investors have fallen 3.3% in October as the spread with US Treasuries slipped to a negative 184 basis points this week, the lowest since May. The gap is 1.5 standard deviations below the five-year average, the second worst among Southeast Asian peers and signals that bonds are relatively more expensive, according to Bloomberg calculations.

Investors are also concerned about fresh political uncertainty stemming from probes against the ruling party and other coalition groups for being under the alleged influence of former premier Thaksin Shinawatra.

“Outflows can continue because the political issue might not resolve itself soon and it is near to the US election,” said Jitipol Puksamatanan, head of investment strategy at Finansia Syrus Securities PCL in Bangkok.

Markets are ratcheting up bets that Donald Trump will win next month’s US presidential election and impose blanket trade tariffs on goods manufactured abroad. Even if the BOT shifts to a more dovish stance at its December meeting as a trade war poses a risk to growth, it may not be enough to push yields lower, said Poon Panichpibool, a strategist at Krungthai in Bangkok.