THAILAND: Inflation Returns To Target Allowing BoT To Watch & Wait
Thai headline CPI inflation ended 2024 within the central bank’s 1-3% corridor – just. December CPI was lower-than-expected with headline at 1.2% y/y up from 0.9%, the highest since May, and core steady at 0.8% y/y, where it has been for four straight months.
- The Bank of Thailand (BoT) kept rates unchanged in December after cutting them 25bp in October. It reiterated today that it wants to keep its policy rate around neutral to allow for room to react given the heightened level of uncertainty, especially from overseas. Inflation back within the band, if sustained, should give it room to continue resisting government pressure to cut rates before it is ready. It expects growth to improve to 2.9% this year up from 2.7% in 2024. The next rate decision is February 26.
- 2024 inflation was very subdued with headline averaging 0.4% but it did improve over the year starting at -1.1% y/y in January. Underlying inflation averaged 0.6% over the year and rose moderately from its 0.36% low in June to 0.77% in September. BoT is forecasting 2025 inflation at 1.1%.
- Higher fuel prices helped the CPI return to the target band in December and the government expects it to rise further in Q1 due to diesel and food prices, but the increase in the minimum wage is not expected to affect Q1 inflation.
- Food prices were steady in December at 1.3% y/y but rice & cereal picked up to 1.4% from 0.9%, while meat, eggs & milk fell and fruit & veg remained steady but negative.
- Non-food inflation picked up to 1.2% y/y from 0.7% driven by transportation as fuel prices rose.
Thailand CPI y/y%
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
MNI UST Issuance Deep Dive: Dec 2024 (2/2)
Throughout November’s policy and market volatility, though, Treasury auctions largely impressed, with 5 of 7 nominal coupon sales trading through.
- Auction Results: November’s nominal coupon auctions were generally strong, with five out of seven auctions trading-through, of which four saw a positive reading on MNI’s Relative Strength Indicator (RSI). The remaining two auctions; 3 and 20-year auctions tailed. See page 2.
- Upcoming Supply: Issuance resumes next week with sales of $58B in 3Y Note, $39B in 10Y Note (reopen), and $22B in 30Y Bond (reopen). December is set to see $15B in nominal Treasury coupon sales, in addition to $22B in 5Y TIPS and $28B FRN for a total of $365B – slightly below the Oct and Nov totals of $369B which were joint-highest since Oct 2021.
- MNI's review includes a calendar of upcoming auctions and buyback operations.
US TSYS/SUPPLY: MNI UST Issuance Deep Dive: Dec 2024 (1/2)
MNI's latest US Treasury Issuance Deep Dive has just been published (PDF link here):
November proved a dramatic month for Treasuries. Yields were volatile before and after the Nov 5 election - after ending October at 4.28%, 10Y yields peaked at five-and-a-half-month high just above 4.50% mid-month before closing November just below 4.18%, as markets attempted to price in the implications of a Republican “sweep”.
- Also buffeting rates was speculation over the would-be successor to Treasury Secretary Yellen. President-elect Trump’s selection of hedge fund manager Scott Bessent was greeted with bull flattening in the curve, implying perhaps that he’s seen as more cautious on fiscal deficits than some of the alternatives (he has expressed support for halving the annual budget shortfall to 3% of GDP).
- The first quarterly Refunding process of Bessent’s Treasury is in early February, by which point we may start to have a better sense of the incoming administration’s approach to both fiscal policy and to more issuance-specific considerations such as duration management.
- Bessent for instance has argued that Yellen’s Treasury erred from a risk management perspective by boosting short-duration issuance, and there are suggestions he would be in favor of reversing course, telling Bloomberg in June “When rates are very low, you should extend duration…I think it’s very unfortunate what Secretary Yellen’s doing. She’s financing at the front end, and she’s making a bet on the carry trade, which is not good risk management.”
US LABOR MARKET: MNI US Employment Insight: Soft Enough To Keep Fed Cutting
Our latest Employment Insight has just been published and emailed to subscribers.
