US-China: tariffs hiked but talks not yet over
Against the dollar, Thai baht traded between 31.54-32.04 last week, markedly more volatile than the week earlier, 31.89-32.05. It closed at 31.59 on Friday (10 May), clearly stronger than the earlier Friday (3 May), 32.04.
As no US-China resolution was reached before the midnight deadline on Friday, the US hiked tariffs from 10% to 25% on USD 200 billion of Chinese goods, taking effects on shipments departing from China after the deadline, which would practically last weeks to arrive in the US and subject to duties. Without details specified, China then promised a retaliation. However, the negotiations among them were reportedly to still occur. This together with the fact that tariff effects would take time helped soften and recover financial markets after risky asset prices dropped on account of the US tariff hikes on China.
On Brexit, the cross-party Conservative-Labour talks between PM May and Corbyn and their fellows are expected to resume this week.
To keep track of the world’s major economies, interesting economic figures released this week include US retail sales, which could help reflect US domestic spending; China’s fixed asset investment, industrial production, and retail sales to observe China’s possible pickup; and Germany’s GDP Q1, inflation, and ZEW Economic Sentiment to see if the country’s current economic deceleration retained or improved.
After Malaysia’s (BNM), New Zealand’s (RBNZ), and the Philippines’s (BSP) central banks reduced interest rates by 25 bps, mainly on the global economic slowdown, ongoing global uncertainties, and subdued inflation, Indonesia’s central bank (BI), with below-target inflation, will decide this Thursday on the policy rate where economists expected it to be unchanged at 6%.
Moving around 31.60-31.65 this morning, USDTHB could be between 31.4-31.9 this week and 31.56-31.68 today.
US treasury yields tick higher due to some US-China optimisms
Thai 10-year government bonds (LB28DA) yesterday yielded 2.44%, relatively unchanged.
Thai and US 10-year government bond yields yesterday closed at 2.529%, -0.40 bps, and 2.47%, +2.0 bps, respectively.
Owing to some US-China optimisms, such as talks to be continued and tariff impacts taking time, US treasury yields rose after falling during Friday’s early trading hours.
Thai 10-year government bonds (LB28DA) could be between 2.40-2.48% this week and 2.43-2.45% today.
Sources: bangkokbiznews, BBC, Bloomberg, CNBC, CNN, Investing.com, Reuters