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The SET closed up another 1.68% for the week, at 1,436.43 on Friday, ahead of the May U.S. nonfarm payrolls report. The U.S. Department of Labor said on Friday that there were only 38,000 jobs added in May, far worse than Wall Street economists' forecast of 155,000 jobs. The unemployment rate in May, however, dropped to 4.7%, from 5.0% in April, for the wrong reason as the labor force participation rate sunk to 62.6%, near its 38-year low.
The Thailand jobs market may have fared somewhat better, as the National and Social Economic Development Board
(NESDB) of Thailand said on Tuesday that the average unemployment rate in the first-quarter increased just 3 basis points to 0.97%, from 0.94% in the same quarter last year, due to the widespread drought. The total labor force in the first-quarter stood at 38.3 million. The Industry Ministry of Thailand reported on Tuesday that its manufacturing production index
(MPI) for April increased 1.54% from a year earlier, beating the 0.8% gain forecasted by a Reuters poll.
The Commerce Ministry of Thailand said on Wednesday that the headline CPI index increased by 0.46% in May from a year earlier, beating a Reuters poll forecast of a 0.19% rise. The core CPI, excluding raw food and energy prices, came in at 0.78% in May, unchanged from April's figure, but slightly missed expectations of 0.81%.
The USD/THB exchange rate was quoted at 35.38 baht per dollar on Friday, down another 0.96% for the week, while the
THB/JPY printed at 3.0119 yen per baht, down 2.41% for the week. The
THB/JPY is now traded below the 3.07 yen per baht resistance level and is about to fall off the cliff.
The Thailand 10-year bond yield jumped 5.21% for the week, at 2.22% on Friday, still down 11.9% year-to-date. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.702% on Friday, surged to 0.518 percentage points, the year-to-date high.
The WTI crude oil spot price declined just 1.33% for the week, to close at $48.90 per barrel on Friday, despite bearish weekly crude oil inventory reports, an unsurprising outcome from the OPEC meeting and the worse-than-expected nonfarm payrolls report. At the OPEC meeting in Vienna, the members failed to agree on anything, including policy change and a production ceiling.
The Energy Information Administration (EIA) weekly U.S. oil inventory report on Thursday showed a draw of 1.37 million barrels to 535.7 million barrels in the week ending May 27, compared to analysts’ expectations for a drawdown of 3.1 million barrels. The American Petroleum Institute (API) inventory data on Wednesday showed U.S. crude inventories increased by 2.35 million barrels.
The EIA also said the weekly U.S. crude oil production fell again for the eighteenth consecutive week, to 8.735 million barrels per day (bpd) for the week ending May 27, 2016, the lowest level since September 5, 2014, at 8.59 million bpd. Weekly U.S. crude oil output has fallen 9.11% 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 9 from last Friday at 325, a 79.8% drop from the peak number of 1,609 in October 2014.
From our technical viewpoint, the SET broke out the 1,400 psychological resistance level and is now bumping into the trendline resistance. A bullish golden cross, or the 50-day and 200-day SMA crossover, remains intact and a reverse head and shoulders chart pattern is about to break out. The next resistance levels are at 1,440 and 1,460, respectively.
The June FOMC meeting will be a non-event. Any rate hike after July could be a high-risk move, unless the Fed wants to be accused of being politically incorrect in an election year. iShares MSCI Thailand Capped ETF (NYSEARCA:THD), which is traded on the New York Stock Exchange, was up 1.7% on Friday, pointing to a higher opening of the SET on Monday, but that is no guarantee. |
