THAILAND: Constitutional Court Gives Suspended PM Until Aug 4 To File Defence
The Constitutional Court granted suspended Prime Minister Paetongtarn Shinawatra a 'final extension' and gave her until August 4 to file her defence paperwork in a case that may see her removed from the position of head of government. The Court added that it will proceed with the case regardless of whether Paetongtarn submits the documents on time.
- Paetongtarn is still able to attend Cabinet meetings after taking on a culture portfolio in a last-minute reshuffle announced on the eve of her suspension. Meanwhile, Phumtham Wechayachai has taken over as Prime Minister in caretaker capacity, pending the resolution of Paetongtarn's legal case.
- The suspension came on the back of Paetongtarn's call with Cambodia's de facto leader Hun Sen, seemingly leaked by Hun himself, in which she called him 'uncle' and promised to 'take care' of anything he might need, despite ongoing border tensions, which have since escalated into deadly clashes.
- The petition against Paetongtarn is part of a broader lawfare campaign targeting the ruling Pheu Thai Party (PTP) and the Shinawatra clan. Clashes with Cambodia have arguably caught Thai political establishment off guard, at a time when various sources of its dysfunctionality were at full display. Thailand does not have a permanent PM or Defence Minister at the moment.
- Some have suggested that factional tensions within Thailand may have contributed to the escalation of the conflict. However, in a widely circulated op-ed, political analyst Ken Mathis Lohatepanont plausibly argues against the 'Domestic Rivalry Theory' and in favour of the 'International Family Feud Theory' - see here.
- Regardless of which theory accurately explains the origins of the latest Thai-Cambodian clashes, the overlap of factional tensions within Thailand and the suspected intervention by Hun Sen amplify local political instability amid pending court cases against senior PTP officials and agitated public opinion.
- The fragile nature of the truce between Thailand and Cambodia came to the fore again, with Thai Foreign Ministry accusing Cambodia of violating the ceasefire agreement. For now, Bangkok expressed its 'full commitment to the ceasefire and the peaceful resolution of the current situation.'
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GERMAN DATA: May Retail Sales Underscore Disappointing Consumer Sector
German May Retail Sales came in at -1.6% M/M (real, seasonally-adjusted) underperforming vs consensus of -0.5%, even considering a 0.5pp upward revision to the April data (to -0.6% M/M; 0.2pp of that revision was already known). On a 3m/3m comparison, retail sales printed +0.3% in May - underscoring that on a broader view, since mid-2024, retail sales have seen no gains in Germany.
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STIR: J.P.Morgan Recommend Buying SFRU5 95.875 Puts Vs. ERU5 98.125 Puts
Late on Friday J.P.Morgan recommended buying SFRU5 95.875 puts vs. ERU5 98.125 puts, given their view on risks surrounding ECB and Fed pricing, while they are also wary of upside surprises in this week’s U.S. labour market data.
CROSS ASSET: MONTH END EXTENSIONS
Bond extensions are small for this Month.
Bloomberg Bonds:
- US Tsys: +0.07yr (small).
- EU Govies: +0.06yr (small).
- UK Govies: -0.04yr (non event).
MS Bonds:
- US Tsys: +0.04yr (small).
- EU Govies: +0.05yr (small).
- UK Govies: -0.03yr (non event).
Barclays FX:
- They see moderate USD selling vs most Majors, weaker against the EUR.
CITI FX:
- They see moderate USD selling, but weaker signal vs the GBP.
BofA FX:
- They see rebalancing flows into the USD and GBP.
