PM Johnson blocks no-deal blocking, more Americans see worsening US economy

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PM Johnson blocks no-deal blocking, more Americans see worsening US economy

Against the dollar, Thai baht on the previous trading day rebounded closed around 30.66.

Although US-China resuming trade talks has been fading on US-China phone call confusion, US Treasury Secretary Mnuchin said that trade meetings would happen but not yet scheduled.

While the majority of Americans said that the US economy still looked good, more US voters said that US economic conditions were sinking, a new Quinnipiac poll points out. August-June survey comparison on US economy: worse, better, the same. 37% up from 23%, 31% down from 39%, and 30% down from 37%, respectively.

San Francisco Fed President Daly, a dovish but non-voting FOMC member, unexpectedly appeared to support monetary policy accommodation as to additionally support employment. She said that US labor market robustness disproportionately benefits disadvantaged groups. Last week, she said that US economic data still showed a solid momentum and that a recession was not approaching.

As PM Johnson was approved to extend the parliamentary summer recess from three to five weeks. The formal reopening of the UK parliament then became 14 October from (30 September). Thus, UK MPs would have less time in proposing ways to block a probable no-deal Brexit possibly to occur by 31 October. Due to such increasingly likely no-deal scenario, the sterling instantly plunged on the dollar by 1%, beyond 1.22, before slightly bouncing and moving around 1.22.

Germany’s consumer confidence (GfK indicator), although marginally better than expectations, stayed relatively low at 9.7 as of September, worst since 2016.

Thailand’s energy giant, PTT, is seeking partnerships with suppliers in the Middle East, while also aiming at expanding businesses in Asian countries, especially in upcoming 1-2 years. This outbound investment could fundamentally lessen pressures on baht strengthening in a longer run.

Moving around 30.63-30.65 this morning, USDTHB could be between 30.59-30.69 today.

 

US treasury 10-year-3-month and 10-year-2-year inversions persist, 30-year at record low

Thai benchmark government bond yield (LB28DA, 9.3 years) on the previous trading day was 1.43, -2.5 bps. Meantime, the latest closed Thai and US 10-year bond yields were 1.44%, -2.2 bps, and 1.47%, -2 bps, respectively.

Amid more likely hard or no-deal together with ongoing US-China trade uncertainty, government bond yields fell. US treasury yield inversions, both 10-year-3-month and 10-year-2-year, persisted, while 30-year yield ticked lower to a new historic low, 1.94%.

Besides almost USD-1-trillion budget deficit, US Treasury is seriously considering 50-year and 100-year bond issuances in low-interest-rate environments.

Spread between long- and short-dated yields: negativity implies a possible upcoming recession. US 10y3m: -52 bps, US 10y2y: -3 bps, Japan 10y2y: +3 bps, German 10y2y: +17.1. bps, UK 10y2y: +9.6, Thai 10y2y: +6.5 bps.

Thai benchmark government bond yield (LB28DA, 9.3 years) could be between 1.42-1.44%, while Thai 10-year yield possibly 1.43-1.45 today.

 

Sources: Bangkokbiznews, BBC, Bloomberg, CNBC, CNN, Financial Times, ING, Investing.com, Reuters, South China Morning Post

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