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The SET bounced off last Friday's low and surged 2.25% for the week, to close at 1,444.99 on Thursday, after the market realized that the Brexit will take years to resolve and the sell-off was a good buying opportunity. While lame duck British Prime Minister David Cameron said that he has no plans until October to revoke the notice to withdraw, the EU could suspend the U.K.'s membership to stabilize the EU using Article 7. The U.K. needs to trigger Article 50 as soon as possible and let the divorce process begin. It is a bad idea to drag it on, as it will send a wrong message to hardcore separatists like Marine Le Pen, head of the France's far-right National Front, who wants France to exit the
EU.
The USD/THB exchange rate was quoted at 35.10 baht per dollar on Friday, down 0.33% for the week, while the
THB/JPY printed at 2.9209 yen per baht, up 0.96% for the week. The
USD/THB technical support is at 34.80 baht per dollar, while the
THB/JPY has now broken below the 3.07 yen per baht support level.
The Thailand 10-year bond yield sunk another 2.94% for the week, at 1.98% on Friday, down 21.43% year-to-date. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.456% on Friday, widened to 0.524 percentage points. The global bond markets are rattled, as the 10-year Japanese government bond
(JGB) yield dropped to negative 0.253% at the close on Friday, while the 10-year German bund yield printed at negative 0.126%, both near record lows.
The World Bank said on Tuesday that it maintained Thailand's economic growth forecast this year at 2.5%, as the global economy has been weakening and exports have been slowing. In April, the World Bank revised Thailand's GDP growth forecast up from 2% to 2.5%, according to the Bangkok Post. The Bank of Thailand recently forecast economic growth to be 3.1% in 2016, while the Fiscal Policy Office, the Ministry of Finance of Thailand, is predicting growth to be as high as 3.3%.
The Commerce Ministry of Thailand said on Friday that the headline CPI index increased 0.38% in June on year-on-year basis, missing the 0.5% forecasted rise by a Reuters poll. June's core inflation rate, excluding raw food and energy, came in at 0.80%, in line with the poll's forecast.
Since May 2015, the Thailand SET has been positively correlated with the Brent crude oil price, the global benchmark, where the correlation coefficient between both of them is +0.88, over the 100-day period. Traders, including algorithmic and high-frequency traders (HFT), may be creating greater profit opportunities by coupling the volatility and price swings in the crude oil futures market with the SET index.
The WTI crude oil spot price was up 3.59% for the week, closing at $49.28 per barrel on Friday, while the Brent crude price was up 4.56% for the week to close at $50.65 per barrel, after bullish weekly crude oil inventory reports and a looming strike by Norwegian oil workers threatened to cut output from Europe’s largest oil producer by up to 6%.
The Energy Information Administration (EIA) weekly U.S. oil inventory report on Wednesday showed a decline of 4.1 million barrels to 526.6 million barrels in the week ending June 24, compared to analysts’ expectations for a drawdown of 2.4 million barrels. The American Petroleum Institute (API) inventory data on Tuesday showed U.S. crude inventories fell another 3.9 million barrels for the week.
Separately, the EIA said the weekly U.S. crude oil production decreased by 55,000 barrels per day (bpd) for the week ending June 24, 2016, to 8.622 million bpd. Weekly U.S. crude oil output has fallen about 10.28% from the peak level of 9.61 million bpd during the week ending June 6, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count was up 11 from the previous week, to 341, compared to 316, when the rig count hit the low on June 6. |
