THAILAND: Markets Approve Of New Cabinet, Instability Looks Likely To Continue
The cabinet choices of new Thai PM Anutin, the third since 2023, have been met by relief. He appears to have chosen experience and continuity which is particularly important given that he promised to hold elections within four months to win the support of the People’s Party who hold the most number of seats in the House of Representatives. The SE Thai rose 1% on Friday and is +0.8% on Monday’s opening while USDTHB is down 1.2% since Tuesday. The THB NEER has remained elevated.
- Outgoing BoT Governor Sethaput warned that Thailand’s credit rating is at risk unless political uncertainty declines which would be needed to rein in fiscal policy. However, given opinion polls, political instability looks likely to continue.
- The latest NIDA poll taken at the end of June, after former PM Paetongtarn’s leaked call but before her suspension, showed that the People’s Party (formerly Move Forward) would gain 46.1% of the vote up from 2023’s 38%, while Paetongtarn’s Pheu Thai would win only 11.5% down from 28.8% followed by United Thai on 14.4% (2023 12.5%) and Anutin’s Bhumjaithai on 10.6% (3.0%).
- It was difficult forming a government after the 2023 election given the need for the senate’s approval which is controlled by the military. Also, Move Forward won the most seats on a platform of reform including of the constitution, the military in politics and the lese majeste law.
- A new Suan Dusit Poll reported that 68% of respondents want the new PM to focus on cost of living and 49% the Thai-Cambodian border dispute. 76.7% believed that elections should be held within four months. 59.2% in a Nida poll taken over 4-5 September said that parliament should be dissolved immediately. Around 59% in this survey were supportive of constitutional reform.
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AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
