THAILAND: VIEW: Goldman Sachs Looks For February Rate Cut
Dec-19 04:21
The BoT unanimously voted to keep rates at 2.25% after cutting 25bp in October with a vote of 5-2. The central bank was widely expected to be on hold in December. Goldman Sachs is forecasting another 25bp cut in Q1 2025 with rates then at 2.0%. February 26 is the only Q1 meeting. USDTHB is up 1% to 34.59 today as greenback strength following a more hawkish Fed weighs.
- “The central bank reiterated that monetary policy will continue to aim at price stability, support sustainable growth and preserve financial stability. However, the MPC will continue to monitor future financial and economic development in determining its monetary policy given the potentially higher future uncertainties -- in other words, be data dependent -- and "ready to adjust rates if needed", according to the press conference.”
- “The BOT continues to forecast real GDP growth of 2.7%/2.9% in 2024/25 (GSe: 2.7%/2.6% in 2024/25). Risk to growth in 2025 is to the downside, according to the central bank in the press conference.”
- “The BOT revised its headline CPI inflation forecast down slightly to 0.4%/1.1% in 2024/25 from 0.5%/1.2%, previously (GSe: 0.5%/1.2% in 2024/25).”
- “On loans, the central bank noted that loan growth has slowed and that the central bank will continue to monitor the credit growth trend, including the impact from the government's new "Khun Soo, Rao Chuay" program -- which includes a three-year interest payment moratorium and debt restructuring options for selected households.”
- “The central bank reiterated at the press conference that it remains worried about household debt.”
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JPY: USD/JPY Drops Following Kato Comments, Tests 154.00
Nov-19 04:13
- The Yen has strengthened today, and is currently the top performing G10 currency for the session. partially reversing its recent weakness.
- The moves came after FinMin Kato reaffirmed the government's commitment to taking action against excessive currency fluctuations.
- The USD/JPY pair dropped as much as 0.4% and testing recent lows of 154.00, before a quick reversal, the pair last trades 154.20.
AUSSIE BONDS: Richer, RBA Minutes Fail To Move Market
Nov-19 04:07
ACGBs (YM +3.0 & XM +3.5) are stronger after dealing in narrow ranges.
- The RBA Minutes for the November meeting failed to be a market mover.
- The minutes noted that “more than one good quarterly inflation outcome” would be needed for it to be “confident” that inflation was sustainably returning to target if it turned out that the temporarily lower headline inflation resulted in a greater drop in inflation expectations and indexation.
- Q4 CPI is released on January 29 and Q1 at the end of April, thus May 20 may be the earliest meeting for a rate cut, consistent with current market pricing. The RBA remains ready to “adjust” policy.
- Cash US tsys are ~1bp richer across benchmarks in today’s Asia-Pac session.
- Cash ACGBs are 3-4bps richer with the AU-US 10-year yield differential +16bps.
- Swap rates are 3-4bps lower.
- The bills strip has bull-flattened, with pricing flat to +3.
- RBA-dated OIS pricing is 1-3bps softer across 2025 meetings.
- Tomorrow, the local calendar will see the Westpac Leading Index alongside the AOFM’s planned sale of A$800mn of the 4.25% 21 December 2035 bond. The AOFM also plans to sell A$700mn of the 2.75% 21 November 2028 bond on Friday.
INDONESIA CENTRAL BANK: INDONESIA: MNI Bank Indonesia-Nov 2024: On Hold, Waits For IDR Stability
Nov-19 04:06
- Bank Indonesia meets on November 20 and it is a close call if it will follow the September 25bp rate cut with another after pausing in October but market volatility and uncertainty following the US election result is likely to mean they stay on hold retaining an easing bias.
- The October statement said that BI’s short-term focus is rupiah stability in response to increased global financial market uncertainty. That has increased substantially since the US elected Trump as the next president.
- BI also said in October that further easing depends on the inflation outlook, growth and the exchange rate. While the first two are in line with another rate cut, the rupiah is not with USDIDR above 15800.
- The market is not sure if the Fed will cut again on December 18, but even it doesn’t the rate differential will allow BI to ease on the same day if the rupiah has stabilised.
- See full preview here.
