- USDTHB: moving in the range 36.80-36.82 this morning supportive level at 36.65 resistance level at 36.85
· SET Index: 1,372.5 (+0.04%), 13 May 2024
· S&P 500 Index: 5,222.7 (+0.16%), 10 May 2024
· Thai 10-year government bond yield (interpolated): 2.77 (-0.24 bps), 13 May 2024
· US 10-year treasury yield: 4.48 (-2.00 bps), 13 May 2024
- US federal debt is the biggest long-term downside risk for markets
- Fed to cut twice or not at all
- China's central bank pledges to support economic recovery
- Dollar just lower; steadying after key inflation data
US federal debt is the biggest long-term downside risk for markets Goldman Sachs notes that two factors offset this improvement: rising interest expense, projected to hit nearly $900 billion this year, and accounting complications related to student loan policies. Overall, the bank believes that over the next few years, the primary deficit looks likely to drift slightly lower, on average, while interest expense continues to climb. However, the election could change the medium-term fiscal outlook, though potentially less than one might imagine. While a Republican sweep would involve an extension of the expiring tax cuts, for the most part this would simply extend current policy (and the current effect on the deficit). While a Democratic sweep would likely involve tax increases, much of this would likely go toward new spending. Fiscal tailwinds have played key roles in driving solid economic growth & rising stock prices in the post-pandemic environment
Fed to cut twice or not at all The Federal Reserve is likely to cut rates twice this year starting in September, but if inflation data doesn't show enough of a slowdown by September, then the Fed is unlikely to deliver any cuts at all this year as there will be little chance of the data improving enough by year end. The forecast comes as the market continues to debate whether one, two or no rates cuts are needed this year. Current market consensus continues to side with about two cuts for this year. The two-rate cut camp believe in Fed chairman Jerome Powell's dovish thesis that monetary policy is restrictive, the recent upside surprises in inflation were backward looking, representing a blip along a bumpy road toward the 2% inflation target, and inflation will downshift at some point in the coming months, paving the way for September rate cut.
China's central bank pledges to support economic recovery China's central bank said on Friday it will ensure reasonably ample liquidity and credit expansion to consolidate the country's economic recovery, which still faces many challenges. The People's Bank of China (PBOC) said it will make its monetary policy flexible, precise and effective and promote a moderate recovery in consumer prices, writing in its quarterly monetary policy implementation report. "We will maintain the stability of monetary policy, enhance the consistency of macroeconomic policy orientation, strengthen counter-cyclical and cross-cyclical adjustments, increase support for the real economy, and effectively consolidate and enhance the positive trend of economic recovery," it said.
Dollar just lower; steadying after key inflation data The 10-year government bond yield (interpolated) on the previous trading day was 2.77, -0.24 bps. The benchmark government bond yield (LB31DA) was 2.76, +0.00 bps. Meantime, the latest closed US 10-year bond yields was 4.48, -2.00 bps. USDTHB on the previous trading day closed around 36.80. Moving in a range of 36.80-36.82 this morning. USDTHB could be closed between 36.65-36.85 today. The dollar saw wild swings last week as mixed US economic readings sparked questions over just when the central bank will begin cutting interest rates this year. However, this volatility is likely to retreat at the start of this new week as traders await the release of the latest US inflation data, which will likely dictate near-term sentiment regarding potential rate cuts. Analysts expect Wednesday’s crucial CPI report to show underlying inflation rising 3.6% on a year-over-year basis, which would be the smallest increase in over three years. But a hotter-than-expected inflation reading would likely price out rate cuts for the rest of the year, likely boosting the greenback.
Sources : ttb analytics , Bloomberg, CNBC, Trading economics, Investing, CEIC
