While US 10-year bond yields rose to around 4.50%, tech stocks and growth stocks managed to rebound amid optimism that Apple was up +2.9%. The slowdown in the US economy may allow the Fed to cut interest rates by 2 times this year, more than the Fed indicated in the dot plot, causing the overall Nasdaq tech stock index to rise +0.83%, while the S&P500 index closed the market +0.27%. .
On the European stock market side, the STOXX600 index rose +0.32% after the results of the first round of French elections. This reflects that even the far-right party (National Rally) got more votes. But they may not get more than half of the parliamentary seats (over 289 seats) due to which a rise in energy stocks like PNB +3.6%, Airbus +2.6% is another factor that could help crude oil prices support the European stock market.
As for the bond market, the US 10-year bond yield continued to rise, reaching nearly 4.50% after some market players worried that Donald Trump would win a second term. With a Republican-controlled Congress. May cause the U.S. However, the rise in U.S. 10-year bond yields has moderated slightly as it faces higher budget deficits. Some market players are waiting to “buy on dip” long-dated bonds out of confidence that the Fed still has the chance to cut interest rates twice this year, following the US economy's slowing trend. The latest ISM PMI index report for the manufacturing sector reiterates this picture, however, with every rise in US 10-year bond yields, we reiterate the opportunity to buy long-term. Interesting Term Bonds If the outlook for Fed interest rates remains “stable” or “low” over the next period and the US 10-year bond yield climbs back above 4.50%, bonds may be a good time to increase investment positions for the long term.
On the currency market side, the dollar rebounded and strengthened. Supported by the weakening of the Japanese yen (JPY) against major currencies, it continued to weaken to 161.50 yen per dollar. After the US 10-year bond yield rose to nearly 4.50%, the dollar faced some selling pressure to take profits from long USD positions amid risk exposure in the US financial market. And reports on US economic data came out worse than expected. As a result, the overall dollar index (DXY) was at 105.9 points (with respect to the price of gold, oscillating between 105.6-106 points). The pace of the rise in both the dollar and US 10-year bond yields has pressured gold prices (the COMEX gold contract for August delivery) down nearly -20 dollars an ounce. before recovering somewhat to $2,340 an ounce. While the conflict situation in the Middle East remains heated, most market players are optimistic about the central bank's tendency to cut interest rates twice this year.
Today, market players are waiting to assess the Fed's outlook for monetary policy. With reports of key US economic data such as the number of jobs (Jobs), the market expects a further decline to the 7.86 million level, while market players await the Fed's report to follow. Chairman Jerome Powell is more likely to cut rates than indicated in the latest dot plot.
Market players on the European side will wait and see. Eurozone CPI Inflation Report for June Wait to follow European Central Bank (ECB) officials' statements.
We estimate that the baht's trend is likely to move sideways at 36.65-36.85 baht per dollar until the market recognizes additional new factors. This reflects a further slowdown in the economy until US economic data reports, however, during this period, the dollar is still supported. European currencies, both the Euro (EUR) and the British Pound (GBP), still carry political risk factors from the depreciation of all major currencies. As for the Japanese yen (JPY), there is still a risk of volatility in its depreciation. As long as the 10-year bond yield remains for 10 years, the US will not retreat. Despite US economic data reports coming out worse than expected.
Additionally, the bot may fluctuate with the flow of commodity-related transactions. Both gold and crude oil especially at the price of gold. It may still be in a correction period and may not continue to correct upward until we see a contraction in US bond yields or until the market faces more severe geopolitical risks. In addition to these factors, we think foreign investors' financial flows may still be volatile, even if foreign investors start to return to net buying of Thai stocks earlier in the day.
We maintain the same view that the bot still moves accordingly and is prone to volatility. As a result of changes in factors affecting the direction of the bond, such as market players' views on the Fed interest rate trend, market players must use different strategies to hedge risks. Using instruments such as options or local currency. This will increase efficiency in hedging exchange rate risk.
Looking at the baht today, it is expected to be around 36.65-36.85 baht/dollar.