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Real-time News
October 28 – Despite rising energy costs pushing up inflation, the Bank of Thailand kept its benchmark interest rate unchanged for the fourth consecutive meeting to support the fragile economic recovery. The seven-member Monetary Policy Committee unanimously voted on Wednesday to maintain the one-day repo rate at 1%, the lowest level since September 2022. This decision was anticipated by all 23 economists surveyed by Bloomberg. This decision extends the longest period of rate stagnation in two years and is in line with previous signals from policymakers. Thai inflation accelerated to 2.82%, the fastest pace since April, but remains within a manageable range, allowing the central bank to maintain an accommodative policy stance as the government strives to support an economy hurt by rising energy costs.1. UBS: US Treasury yields may have reached a temporary high, but short-term pressures from inflation, geopolitics, and fiscal deficits remain. A moderate decline in yields is expected over the next 12 months, but long-term bonds still face significant fiscal and supply risks. 2. Standard Chartered: After yields fell to 4.97% on October 22, Standard Chartered believes its previous bullish view on US Treasuries has been validated to some extent. The Middle East situation and sell-offs in AI-related stocks have driven funds towards safe-haven assets; however, high inflation, rising oil prices, and the possibility of further Fed rate hikes mean the foundation for a US Treasuries rebound remains fragile. 3. Goldman Sachs: Long-term US Treasury yields still face upward pressure, primarily due to rising energy prices, a large supply of government bonds, and insufficient demand from institutional investors. Even if oil prices stabilize, the transmission of energy costs to other goods and services may continue, making investors reluctant to lock in long-term bond yields prematurely. Fiscal deficit pressures may also keep long-term bond risk premiums high. 4. BlackRock: Upgraded short-term US Treasuries to overweight and long-term US Treasuries to neutral. After a significant rise in US Treasury yields, current yield levels are more attractive, and market-priced-in short-term rate hike expectations may be too high. However, fiscal and inflation uncertainties still make them relatively cautious about long-term bonds. 5. DBS Bank: The US Treasury yield curve still faces pressure to steepen further. Short-term yields have already reflected expectations of multiple future Fed rate hikes and are somewhat constrained, but 10-year to 30-year Treasury yields are more affected by term premiums, fiscal supply, and long-term inflation risks. Therefore, even if the Fed pauses rate hikes in October, long-term US Treasury yields may not necessarily decline in tandem. 6. State Street Investments: In September, the yields on 2-year and 10-year US Treasury bonds rose by 57 and 49 basis points, respectively, but credit spreads for high-rated corporate bonds remained largely stable, while spreads for low-rated corporate bonds widened significantly. This indicates that the sell-off of US Treasuries has not had an equal impact across all credit sectors, and the market is still differentiating between high-quality assets and companies with higher credit risk. 7. PIMCO: The rise in US Treasury yields has, to some extent, offset some of the economic stimulus brought about by the rise in US stocks and investment in artificial intelligence, as the Fed has tightened financial conditions. Therefore, although the Federal Reserve may still raise interest rates by 25 basis points in December, the recent rise in long-term interest rates provides officials with a reason to slow the pace of tightening and observe the economic response.October 28th - German consumer confidence slipped slightly as rising energy costs stemming from the Iran war continued to strain household finances. Data released Wednesday by the Nuremberg Institute for Market Decisions (NIM) and GfK showed that Germanys GfK consumer confidence index fell to -30.8 in November from -30.6 in October. Rolf Buerkl, head of consumer sentiment research at NIM, stated, "While consumer optimism about the economic outlook is growing, skepticism remains dominant regarding personal finances. Growing concerns about inflation and weak income prospects are dampening consumers willingness to make large purchases."On October 28th, Jefferies analyst Mohit Kumar stated in a report that Federal Reserve Chairman Kevin Warshs primary focus is on credibility, not attempting to lean towards a hawkish or dovish stance. This is likely the information we will receive today. If there are inflation risks, the Fed will need to act. Jefferies is betting on lower oil prices, predicting they will fall back to $60-65 per barrel in two years. Therefore, oil prices should not be the determining factor for the medium-term inflation outlook.Germanys GfK consumer confidence index for November was -30.8, compared to a forecast of -30.9 and a previous reading of -30.6.
