Kaohoon Morning Brief – 18 July 2022

1) FSS expects short-term rebound following better-than-expected US economic data

Finansia Syrus Securities (FSS) expected a short-term technical rebound for the SET Index within the range of 1,530-1,550 points after being able to recover some losses at the closing on last Friday. The overall outlook should be more relaxing in today’s session after the economic data of the U.S. was better than expected, resulting in short-term flows to risk assets. The analyst recommended investors to monitor the ECB meeting that is expected to raise its policy rate for the first time in a decade.


2) Long-term inflation fears drop more than expected

Long-term inflation expectations dropped more than expected to 2.8% from the previous reading of 3.1%, according to the consumer sentiment study polled by the University of Michigan on households.

This measure is now down sharply from the 3.3% reading that compelled the Fed to signal that it will hike interest rates by 75 basis points at its June meeting.

Meanwhile, inflation expectation for one year from now was 0.1 percentage point lower at 5.2%.


3) Inflation in New Zealand hits 32-year high in June

New Zealand’s consumer price index rose to 7.3% in June 2022, its highest in 32 years due to higher prices for construction and petrol, according to its statistics department Stats NZ announced on Monday.

“Supply-chain issues, labor costs, and higher demand have continued to push up the cost of building a new house,” Stats NZ General Manager Jason Attewell said in a statement.


4) IMF warns lower commodity prices are from recession risks, not inflation has been tamed

The International Monetary Fund said that commodity prices such as oil that seem to be slowing down in recent weeks were due to recession risks, which was not necessarily because inflation has been tamed.

Kristalina Georgieva, managing director of IMF expected rate hikes will likely keep rising until 2023 when red-hot consumer prices will begin to cool in response to the measures from central banks.