- USDTHB: moving in the range 36.04-36.13 this morning supportive level at 35.90 resistance level at 36.20
- SET Index: 1,298.1 (-0.27%), 24 July 2024
- S&P 500 Index: 5,427.1 (-2.34%), 24 July 2024
- Thai 10-year government bond yield (interpolated): 2.636 (-0.17 bps), 24 July 2024
- US 10-year treasury yield: 4.28 (+3.0 bps), 24 July 2024
- US business activity rises; pricing power weakens
- Euro zone business growth stalls in July
- South Korea's unexpected GDP shrinkage raises prospects for a rate cut
- Short yen positions are closed ahead of BOJ and Fed meetings.
US business activity rises; pricing power weakens
In July, U.S. business activity reached its highest point in 27 months. However, businesses faced challenges in maintaining higher prices for their goods and services due to consumer resistance, which could temper inflation. The S&P Global flash U.S. Composite PMI Output Index, which monitors both manufacturing and services sectors, rose to 55.0 this month, marking its highest level since April 2022. This increase followed a final reading of 54.8 in June. The preliminary manufacturing PMI fell to 49.5, a seven-month low compared to June's 51.6, diverging from economists' expectations of a slight decrease to 51.7. Conversely, the services PMI rose to 56.0, a 28-month peak up from 55.3 in June, surprising economists who anticipated a decline to 55.0. Additionally, S&P Global noted that uncertainty related to the upcoming November presidential election and its potential policy outcomes continued to impact future sentiment negatively.
Euro zone business growth stalls in July
Euro zone business activity stalled this month as the modest growth in the services sector failed to offset a sharper decline in manufacturing. According to HCOB's preliminary composite Purchasing Managers' Index (PMI) from S&P Global, the index fell to 50.1 in July from 50.9 in June, just above the 50-mark indicating neither growth nor contraction. This defied expectations, which had anticipated an increase to 51.1. The Eurozone Manufacturing PMI dropped from 45.8 in June to 45.6 in July, falling short of the consensus forecast of 46.1 and reaching a seven-month low. Meanwhile, the Services PMI declined from 52.8 to 51.9, lower than the expected 53.0 and marking a four-month low. This shortfall can be attributed to Germany, which surprisingly contracted, dropping below the vital threshold for the first time since March.
South Korea's unexpected GDP shrinkage raises prospects for a rate cut
South Korea's economy unexpectedly contracted in the second quarter, marking the sharpest decline in six quarters. Slumping consumer spending offset gains from exports, raising expectations for an imminent interest rate cut. According to data from the Bank of Korea, seasonally adjusted Gross Domestic Product (GDP) for April-June fell 0.2% from the previous quarter, missing analysts' expectations of a 0.1% gain. This followed a robust 1.3% growth in the first quarter, the highest since Q4 2021. Year-on-year, the economy expanded by 2.3%, down from 3.3% growth in Q1 2024. Market sentiment suggests the likelihood of a rate cut in the coming quarter.
Short yen positions are closed ahead of BOJ and Fed meetings.
The 10-year government bond yield (interpolated) on the previous trading day was 2.636, -0.17 bps. The benchmark government bond yield (LB346A) was 2.63, -1.0 bps. Meantime, the latest closed US 10-year bond yields was 4.28, +3.0 bps. USDTHB on the previous trading day closed around 36.11 moving in a range of 36.04 – 36.13 this morning. USDTHB could be closed between 35.90 - 36.20 today. The Dollar was flat on Thursday, and was weighed on the notable Yen strength, but this was offset by weakness in other G10 currencies. The Japanese yen outperformed, buoyed by reports from BoJ sources indicating that the central bank is considering a rate hike next week and has a detailed plan to halve bond buying in the coming years.
Sources : ttb analytics , Bloomberg, CNBC, Trading economics, Investing, CEIC
