China pickup signs worse-off

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China pickup signs worse-off

Thai baht traded widely against the dollar between 31.43-31.65 yesterday and closed stronger around 31.50.

Amid the tit-for-tat US-China trade war, US stock markets rebounded after tumbling. Meantime, President Trump called the Fed for a rate cut again, while implied rate-cut probabilities also increased. Calculated using US Treasury 10-year-3-month spread, the New York Fed updated on 2 May (i.e. prior to the recent US-China trade escalation) that the likelihood of a US recession to occur within the next twelve months climbed to 27.5%.

On Brexit, a vote by UK MPs on a UK-withdrawal deal to be proposed by PM May is expected to occur again in early June, no matter there would be an agreement or not from the cross-party Conservative-Labour talks.

Unimpressively, the euro area’s industrial production shrank while its ZEW economic sentiment index, reflecting long-term economic outlook by analysts and economists, remarkably declined to be negative. Similarly, Germany’s ZEW economic sentiment index plummeted below zero despite improving inflation of 2%.

As China showed some recovery sings earlier, the latest economic releases demonstrated that the economy is not evidently bottoming out as April growth rates of all industrial production, fixed asset investment, and retail sales, reported this morning, dropped from their previous improvements.

Moving widely between 31.49-31.55 this morning, USDTHB could be between 31.47-31.57 today.

 

US 10-year-3month treasury spread back to be positive

Thai 10-year government bonds (LB28DA) yesterday yielded 2.436%, -0.37 bps.

Thai and US 10-year government bond yields yesterday closed at 2.525%, -0.06 bps, and 2.42%, +2.0 bps, respectively.

After the US 10-year treasury yield plunged causing yield curve inversion again, it slightly bounced back exceeding the 3-month yield by 1 bps.

Today, Thai 10-year government bonds (LB28DA) could be between 2.43-2.45%.

 

Sources: bangkokbiznews, BBC, Bloomberg, CNBC, CNN, Investing.com, Reuters

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