THAILAND: Ruling Coalition Loses Majority, Bhumjaithai Edges Ahead In PM Race
The progressive People's Party (PP) has emerged as an unexpected kingmaker as the Bhumjaithai Party (BJT) and Pheu Thai Party (PTP) are locked in a race to nominate the next Prime Minister following a Constitutional Court verdict removing Paetongtarn Shinawatra from office. A flurry of defections has amounted to a progressing collapse of the PTP-led coalition, with BJT leader Anutin Charnvirakul emerging as the front-runner to become the next PM ahead of a possible snap election.
- The BJT has managed to muster the support of a heterogenous coalition of parliamentary forces, including a significant number of defectors (locally called 'cobras'). The breakneck speed at which the party managed to cobble together a new alliance suggests that contingency plans were in place before the Constitutional Court's verdict on Friday.
- Among the parties that threw their weight behind BJT leader Anutin Charnvirakul's PM bid is the Kla Tham Party (KTP) and the Suchart Chomklin faction of the United Thai Nation Party (UTN), whose defections deprived the PTP-led coalition of its razor-thin majority in parliament, while more PTP allies are reportedly considering their options.
- It appeared that Anutin was set to become the next PM after BJT agreed to the PP's conditions for an unprecedented confidence-and-supply arrangement, but the PTP countered its offer and sent a delegation for talks with the PP, arguably offering slightly more attractive terms
- The People's Party demanded that the next Prime Minister dissolves the House of Representatives within four months and call a constitutional referendum, which both the BJT and PTP have already agreed to. The PP said they would consider both offers and make a decision whom to back by Monday afternoon.
- Political analyst Ken Lohatepanont notes that 'momentum has clearly swung [Bhumjaithai's] way' and for a variety of strategic reasons, 'there is a higher chance that the PP backs up Bhumjaithai', even as 'Bhumjaithai and their crew of renegade factions are (...) an even odder fit with the PP than Pheu Thai and their allied parties.'
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EQUITY TECHS: E-MINI S&P: (U5) Corrective Pullback Extends
- RES 4: 6523.63 1.764 proj of the May 23 - Jun 11 - 23 price swing
- RES 3: 6500.00 Round number resistance
- RES 2: 6477.31 1.618 proj of the May 23 - Jun 11 - 23 price swing
- RES 1: 6468.50 High Jul 31 and the bull trigger
- PRICE: 6269.25 @ 14:47 BST Aug 1
- SUP 1: 6264.25 Intraday low
- SUP 2: 6288.25 Low Jul 17
- SUP 3: 6241.00 Low Jul 16
- SUP 4: 6189.50 50-day EMA
The trend set-up in S&P E-Minis remains bullish and short-term weakness is considered corrective. Note that the contract has traded through support at the 20-day EMA, at 6336.64. The breach signals scope for a deeper retracement and opens the 50-day EMA at 6189.50. Clearance of this average is required to signal a stronger reversal. The primary trend remains up, key short-term resistance and the bull trigger is 6468.50, the Jul 31 high.
EUROZONE ISSUANCE: EGB Supply (2/2)
- Spain will come to the market on Thursday to hold a Bono/Obli/ObliEi auction. On offer will be the on-the-run 3-year 2.40% May-28 Bono (ISIN: ES0000012O59), the on-the-run 10-year 3.20% Oct-35 Obli (ISIN: ES0000012P33) and the short 20-year 3.45% Jul-43 Obli (ISIN: ES0000012K95) alongside the 1.00% Nov-30 Obli-Ei (ISIN: ES00000127C8). The auction size will be confirmed on Monday.
- As we also expected in the announcement, the auction scheduled for 21 August was cancelled (in line with precedent in recent years).
- France will conclude issuance for the week, also on Thursday by holding a LT OAT auction for E8.5-10.5bln. This is a slightly smaller auction than the E10-12bln range we have seen recently (expected, given that it is August) but what is perhaps a bit less expected is that all of the OATs on offer are off-the-run issues: the 1.25% May-34 OAT (ISIN: FR0013313582), the 1.25% May-36 OAT (ISIN: FR0013154044), the 0.50% May-40 OAT (ISIN: FR0013515806) and the 4.00% Apr-55 OAT (ISIN: FR0010171975).
NOMINAL FLOWS: The upcoming week sees E0.7bln of redemptions, of which E0.6bln is from a formerly 3-year LithGB, while coupon payments total just E0.2bln. This leaves estimated net flows for the week at positive E24.4bln, versus negative E26.2bln this week.
EUROZONE ISSUANCE: EGB Supply (1/2)
Austria, Germany, Spain and France look to hold auctions in the upcoming week. We pencil in issuance of E25.4bln, up from E17.2bln this week.
- Austria will kick off issuance for the week on Tuesday with an RAGB auction, selling a combined E1.4375bln of the 2.90% Feb-33 RAGB (ISIN: AT0000A324S8) and the on-the-run 10-year 2.95% Feb-35 RAGB (ISIN: AT0000A3HU25).
- Germany will also hold an auction on Tuesday with E5bln of the 1.90% Sep-27 Schatz (ISIN: DE000BU22106) on offer.
- Germany will return to the market on Wednesday to hold a 15-year Bund auction. On offer will be E1.5bln of the 1.00% May-38 Bund (ISIN: DE0001102598) alongside E1.0bln of the 3.25% Jul-42 Bund (ISIN: DE0001135432).
