Global tech tensions go on, Fed stays patient
Against the dollar, Thai baht was weaker, trading between 31.92-32.03 yesterday and closed around 31.98.
According to the minutes from the previous FOMC meeting (30 April – 1 May), Fed authorities affirmed a ‘patient’ monetary-policy stance and likely unchanging rates on low but ‘transient’ inflation as well as solid employment, despite of amplifying rate-cut likelihood implied by Fed funds futures, up to about 70% for the FOMC meeting in December 2019.
Apart from the trade escalation where the US threatened to additionally impose tariffs on USD 300 billion of Chinese good, which could potentially reduce US corporate earnings by up to 6%, estimated by Goldman Sachs, the tech tensions went on. ARM, UK-based chip designer, developing the basis for most mobile device processors around the world, banned doing businesses with Huawei since US-origin technology is contained in the chip designs. Goldman Sachs also said that Apple earnings could fall by as large as almost 30% if the company’s products were forbidden in the mainland China.
Heavily weakening against the dollar by approximately 7% year-to-date, Korean policymakers were becoming increasingly worried about the Korean won’s recent rapid depreciation, perhaps relevant with Korea’s softening growth together with concerns over electronics exports, and drops in the yuan on the US-China conflicts. The Bank of Korea’s officials were discussing possible measures in order to enhance the won. Interest rate hikes were considered unlikely, given the slowing economy, while currency intervention could be more probable.
Moving between 31.92-31.97 this morning, USDTHB could be between 31.9-32.0 today.
US treasury yields drop amid ongoing US-China disputes
Thai 10-year government bonds (LB28DA) yesterday yielded 2.437%, -1.33 bps.
Thai and US 10-year government bond yields yesterday closed at 2.532%, -1.51 bps, and 2.39%, -4.0 bps, respectively.
Amid the continuing US-China disputes while Fed staying patient, US treasury yields dropped.
Today, Thai 10-year government bonds (LB28DA) could yield between 2.42-2.45%.
Sources: bangkokbiznews, BBC, Bloomberg, CNBC, CNN, Financial Times, Investing.com, Reuters