Countdown to the US election day.
On October 26, 2020 at 7:14 a.m.
Column Money Week: Peerapan Suwannarat, Manatwin Thitisomboon, Capital Market Business Kasikorn Bank
Capital Market Business Kasikorn Bank estimates that the baht has continued to fluctuate. It is in the frame 31.00-31.50 entering the last week before the United States election day. That will take place on November 3, which is expected to make the world financial markets volatile. Although in the past The market will weigh on whether Democratic candidate Joe Biden will win the election. While the key economic figures are the US GDP and the euro zone release in the third quarter, US inflation. While it is necessary to monitor the actions of the ECB and the BOJ from the monetary policy meeting this week. The Thai side will reveal current account balance figures in September.
Overview of the foreign exchange market in the past week The baht gradually depreciated throughout the week in a narrow range of 31.17-31.32, driven by political uncertainty in Thailand that affected investors’ confidence while the baht still had a supporting factor. This comes from the appreciation of the regional currency and the depreciation of the dollar. Confidence in the dollar fell over the week amid expectations of a US stimulus package, House of Representatives spokesman Nancy Pelosi prepared to discuss with US Treasury Secretary Stephen Mnuchin. To mitigate differences in the finance policy for the new round of stimulus measures ahead of the November 3 presidential election, the uncertainty is still high as the president of the House of Representatives Pelosi pointed out that the measure is unlikely to be law. In time for the US election day The pound was the strongest since March on the prospect of a Brexit deal by EU negotiator Michelle Michel. Barnier told the Council of Europe that a trade deal after the UK’s exit from the European Union was within reach. The baht closed at 31.273 (Thursday at 5:00 p.m.).
The bond market over the past week The 10-year US Treasury yield rose to a four-month highest on the back of a sell-off as a safe haven. Among the hopes of the issuance of US economic stimulus measures The US 10-year Treasury yield crossed the resistance at 0.80% to reach 0.836%, the highest in four months, while the 30-year Treasury yield rose to 1.653. This is the highest level in four months as well, while the government bond yields of other major economies have rallied in the same direction. While the key economic figures are released US retail sales. September continued to expand for the fifth month at 1.9% MoM, accelerating from 0.6% in the previous month and above the market expected to grow by 0.8%. October rose sharply to 81.2 from 80.4 the previous month and higher than the market expected of 80.5, boosting government bond yields as well.
Summary of the Thai bond market for the past week The main issues investors follow are still affected by political rallies. While the governor of the Bank of Thailand New people have voiced concerns that the Thai economy will recover slowly from the effects of COVID-19. Especially the tourism sector and it will take at least two more years for the economy to return to pre-crisis conditions. And monetary policy will not hinder economic recovery. But the interest rate is the lowest in Asia. Including the ability to reduce interest below the current level is limited. The fiscal policy plays an important role in the recovery of the Thai economy. While Thai government bond yields moved in a narrow range, close to the closing level in the previous week. In the middle of the week, there was a 10-year government bond auction (LB29DA) auction amount of 10,000 million baht, which turned out to be quite good. The average yield is 1.35% and the bid coverage ratio is up to 4.14 times, thus, after the auction, there are investors to buy continuously. 2, 3, 5, 7 and 10 years were 0.53%, 0.58%, 0.67%, 0.87%, 1.10% and 1.41%, respectively.
Foreign capital flows in the past week flowed out of the Thai bond market, totaling a net worth of approximately 4,591 million baht, which was a net sale of 3,898 million baht in short-term debt instruments, net sales of 437 million baht in long-term debt securities and had debt instruments. Held by foreign investors expires 256 million baht