THAILAND: Pheu Thai Looks To Regroup After Thaksin's Verdict, Coalition Collapse
The caretaker cabinet held its swansong meeting devoted to Thai-Cambodian border tensions, with the administration led by the Pheu Thai Party (PTP) set to vacate the offices for the incoming Bhumjaithai-led (BJT) government, while struggling to regain poise amid continued political headwinds. Earlier today, the Supreme Court ordered PTP patriarch Thaksin Shinawatra back to prison after concluding that he misled the authorities about his health conditions.
- The Supreme Court unanimously (5-0) voted to sentence Thaksin to one-year imprisonment, effective today, after concluding that his six-month detention in a hospital was served in contravention of the Corrections Department regulations. Following the announcement of the verdict, he was immediately sent to the Bangkok Remand Prison.
- The ruling on Thaksin's '14th floor case' concluded a series of three high-profile cases, which we covered in much detail in an analysis piece released last month. The verdicts lined up as we expected, with Thaksin securing acquittal in a lèse-majesté but being sentenced in the '14th floor case', and with his daughter Paetongtarn Shinawatra removed from the Prime Minister position.
- The latest rounds of lawfare targeting PTP, a scandal surrounding Paetongtarn's leaked phone call with Cambodia's de facto leader and a looming snap election leave the party in a predicament, as it makes way for the incoming BJT-led administration. There is speculation that Natthaphon Narkphanit could be only minister be re-appointed to the Anutin Cabinet (via a promotion from Deputy Defence Minister to a full Defence Minister) in order to ensure continuity in security leadership.
- Thai Enquirer reported that ' the last Cabinet meeting (...) approved a document proposed by the National Security Council (NSC) from the Secretariat of the Thailand-Cambodia General Border Committee (GBC), ahead of signing an agreement at tomorrow's extraordinary GBC meeting.' The Cabinet also extended the 7% VAT rate for another year, with Deputy Finance Minister Julapun Amornvivat citing concerns that the incoming administration could raise it back to 10%.
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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.
