Kaohoon Morning Brief – 15 June 2022

1) FSS expects SET Index to move in sideways trends before Fed’s rate hike

Finansia Syrus Securities (FSS) expected SET Index to move in sideways trends in today’s session around 1,600 points as investors are looking forward to today’s Fed meeting that could announce a 75bps rate hike (98.6% possibility estimated by the market) to curb rising consumer prices, but could risk slowing down its economy.

The analyst recommended investors to monitor the Fed’s statement toward inflation rate and its outlook for the next two meetings.


2) Fed Funds Futures pricing in 97% chance of a 75bps hike today

The Fed Funds Futures is now pricing in a 97% chance of a 75 basis points rate hike on Wednesday, up from 50bps estimated earlier. The shift in policy rate forecast came after the hotter-than-expected U.S. inflation in May, which crashed all hopes that consumer prices had peaked in March and was on its way down.

However, If the Federal Reserve does not hike policy rate that aggressively, it is likely that the market could see a fadeable relief rally afterward.


3) China economic data for May beat expectations

China released economic data for May that beat all expectations as the country is moving toward relaxing Covid-19 restrictions.

Industrial production rose by 0.7% in May from a year ago vs an expected 0.7% drop. In April, industrial production fell by 2.9% from the same period in 2021.

Retail sales contracted less than expected, dropping by 6.7% in May YoY vs an expectation to decline by 7.1%. In April, retail sales fell by 11.1% from a year ago.

Fixed asset investment YTD to May rose 6.2% vs 6% expected, but slowed down from 6.8% growth from the period ending April 2022.

Unemployment rate in May was at 5.9%, down from 6.1% in April and a 6.1% forecast.