THAILAND: VIEW: Goldman Sachs Expects 25bp Cuts In October & December
BoT left rates at 1.75%, as was expected, as it considered timing given how low rates already are. Goldman Sachs expects another 50bp of easing with 25bp in October and 25bp in December, on top of the 75bp already this cycle. It sees the risks to this forecast as “balanced” and dependent on the new Governor who takes over from the start of October.
- Goldman notes that the “BoT said it is ready to adjust policy in line with the economy, but timing for it to be most effective is a key consideration, given the limited policy space”.
- “MPC voted 6 to 1 to keep the policy rate unchanged at 1.75% at its meeting today. The single dissenter voted for a 25bp cut on the back of weak economy”.
- “The BOT continues to expect low inflation with headline and core CPI inflation at 0.5% and 1.0% in 2025, below the target band of 1-3% (GSe: 0% and 0.6%, respectively). The MPC continues to monitor any impact to global energy prices amid heightening geopolitical risks.”
- “The BOT revised up its growth forecast for 2025 to 2.3% (GSe: 1.5%) from 2.0% in the previous meeting, under the scenario of 18pp additional US tariff to be imposed on Thailand, 30pp on China and 10pp to other countries. The upward revision was mainly due to modest upward surprise in Q1 real GDP print driven largely from front loading activity.”
- “The MPC expects growth momentum to slow in the second half given the impact from global trade uncertainty, end of front-loading and amid lower expected foreign tourist arrivals.”
- “On the credit front, overall credit growth has slowed. The MPC voiced some concerns of deteriorating credit quality, especially SME and household loans.”
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
OIL: Crude Expects Another Large OPEC Output Increase, Meeting May 31
- Oil prices are down slightly today after finishing little changed yesterday. WTI is 0.5% lower at $61.24/bbl after reaching a high of $61.74 earlier. Brent is down 0.3% to $64.56 off the peak of $64.98. The market continues to monitor US trade talks especially with the EU but the focus now is on the May 31 OPEC meeting where another large output increase is expected to be agreed. The USD index is up 0.1%, which is probably moderately weighing.
- While energy markets remain concerned that the imposition of outsized tariffs would weigh on global energy demand, it is currently focussed on the impact of OPEC’s production plans on an already expected market surplus. The group increased output by over 400kbd in both April and June, more than expected. Apparently, a rise of a similar size is being discussed for July.
- There is key US data this week to gauge the strength of demand including orders (Tues), Q1 GDP revision (Thus), PCE (Fri), Trade (Fri) and Uni Michigan consumer confidence (Fri). There are also US crude & product data.
- Later the Fed’s Kashkari and Barkin appear. US April durable orders, May consumer confidence & Dallas Fed manufacturing index, March US house prices, French preliminary May CPI and euro area EC May survey are released.
BUND TECHS: (M5) Outlook Remains Bullish
- RES 4: 132.56 High Feb 28 and a key resistance
- RES 3: 131.72/132.03 High May 7 / High Apr 7 and the bull trigger
- RES 2: 130.86 High May 9 Round number resistance
- RES 1: 130.94 High May 23
- PRICE: 130.88 @ 05:45 BST May 27
- SUP 1: 129.49/13 Low May 22 / 15 and key short-term support
- SUP 2: 129.02 Low Apr 10
- SUP 3: 128.60 Low Apr 9 and a key support
- SUP 4: 128.19 Low Mar 27
The recovery in Bund futures that started May 15 suggests the move down between Apr 22 - May 15, has been a correction. A stronger resumption of gains would strengthen the reversal and signal scope for a climb towards 132.03, the Apr 7 high. Initial resistance is last Friday’s high of 130.94. Key short-term support to watch is 129.13, the May 15 low. A break would be bearish and mark a resumption of the recent bear cycle.
ASIA: Major Bourses Down in Weak Day Across Region
Following yesterday's decline of -8.60%, China's BYD fell again today dragging the Hang Seng lower and impacting sentiment in the region. BYD is down -3.6% today as concerns grow that its sales success hides the scale of discounting in China. BYD announced price cuts of over 30% to stabilise the performance. BYD stock had risen over 70% this year, putting the recent falls in context.
In Korea holding companies are rallying with some up over 10% as expectations that a new president may be more shareholder friendly. One of Malaysia's biggest banks Maybank quarterly earnings showed solid loan growth and a 4% rise in income for the first quarter. With net foreign inflows of over $250m in May, Indonesia's Jakarta Composite is set to continue its recent run of good performance.
- China's major bourses were all lower today with the Hang Seng down -0.18%, CSI 300 -0.55%, Shanghai -0.33% and Shenzhen down -0.65%
- The KOSPI fell -0.66% today as markets hold their breath ahead of the BOK this week.
- The FTSE Malay KLCI fell again today, down -0.52% eighth day of losses out of the the last eleven trading days.
- The Jakarta Composite did very little today but remains over 6% better for the week.
- The Straits Times in Singapore eked out modest gains of +0.13% and the PSEi in the Philippines was flat.
- The NIFTY 50 is down -0.88% yet is holding on to a +1.8% gain for the month to date.
