- USDTHB: moving in the range 33.39-33.49 this morning supportive level at 33.35 resistance level at 33.65
- SET Index: 1,435.8 (-0.06%), 18 Sep 2024
- S&P 500 Index: 5,618.3 (-0.3%), 18 Sep 2024
- Thai 10-year government bond yield (interpolated): 2.522 (+2.15 bps), 18 Sep 2024
- US 10-year treasury yield: 3.70 (+5.00 bps), 18 Sep 2024
- Fed cuts rates by half point to support economy
- UK inflation holds at 2.2%, paving the way for potential rate cuts
- Japan's exports slow sharply, machinery orders shrink in blow to economic recovery
- Dollar rises after Fed's 50 basis point rate cut
Fed cuts rates by half point to support economy
The Federal Reserve reduced its benchmark interest rate by half a percentage point, marking an assertive beginning to a policy shift intended to support the US labor market. The Federal Open Market Committee voted 11 to 1 to adjust the federal funds rate to a range of 4.75% to 5%, after maintaining it at its highest level in two decades for over a year. Projections released after their two-day meeting indicated that a slim majority of 10 out of 19 officials preferred additional cuts of at least half a percentage point during their remaining meetings in 2024. Seven officials supported a smaller quarter-point reduction this year, while two opposed any further adjustments. Chair Powell emphasized a flexible approach, noting that future decisions would be made on a meeting-by-meeting basis and cautioned against interpreting today's move as setting a new pace. He downplayed concerns about the economy, spending much of the press conference highlighting its strengths, and stated that the 50 basis point reduction reflects the Fed's commitment to stay proactive. He also remarked that he believes the neutral rate is higher than previously thought.
UK inflation holds at 2.2%, paving the way for potential rate cuts
In August, UK inflation stayed just above the Bank of England’s 2% target, bolstering expectations for another interest rate cut later this year. Consumer prices rose 2.2% year-on-year, matching July's rate but falling short of BOE predictions. While prices for motor fuel, restaurants, and hotels decreased, airfares rose. Services inflation, a key concern, increased to 5.6% from 5.2%, though this rise is expected to be temporary. Both figures remain below the BOE's August forecasts. These trends suggest the BOE may continue to loosen its policy after cutting rates for the first time since the pandemic on August 1.
Japan's exports slow sharply, machinery orders shrink in blow to economic recovery
Japan's export growth experienced a significant slowdown in August, with shipments to the U.S. falling for the first time in three years. Additionally, machinery orders unexpectedly declined in July, raising concerns about the economy's ability to recover. Data released Wednesday showed total exports rose 5.6% year-on-year in August, the ninth consecutive month of growth but below the 10% forecast after a 10.3% increase in July. Exports to the U.S. fell 0.7%, the first decline in nearly three years, mainly due to a 14.2% drop in auto sales. Imports increased by 2.3%, missing expectations of 13.4%. As a result, the trade balance showed a deficit of 695.3 billion yen ($4.90 billion), better than the projected 1.38 trillion-yen deficit.
Dollar rises after Fed's 50 basis point rate cut
The 10-year government bond yield (interpolated) on the previous trading day was 2.522, +2.15 bps. The benchmark government bond yield (LB346A) was 2.515, +2.5 bps. Meantime, the latest closed US 10-year bond yields was 3.70, +5.00 bps. USDTHB on the previous trading day closed around 33.34 moving in a range of 33.39 – 33.49 this morning. USDTHB could be closed between 33.35– 33.65 today. The dollar experienced significant volatility following the Fed's actions, initially dropping to a new year-to-date low after the Fed cut rates by 50 basis points. However, it later rebounded as Fed Chair Powell indicated that decisions would be made on a meeting-by-meeting basis, suggesting that this move shouldn't set a new standard. The euro also saw fluctuations, returning to flat territory just above the 1.1100 level, primarily influenced by the Fed's announcements. Meanwhile, the Japanese yen gained support after the Fed's rate decision, bringing USD/JPY below 141.00, although this gain eventually reversed.
Sources : ttb analytics , Bloomberg, CNBC, Trading economics, Investing, CEIC
