Kaohoon Morning Brief – 15 February 2023

1) FSS expects SET Index to trade lower amid negative sentiment in the market from US CPI data

Finansia Syrus Securities (FSS) stated that Thailand’s SET Index could move in a sideways to sideways-down trend within the 1,645-1,660 range, pressured by internal factors such as US CPI for January that was higher than expected, resulting in the market adjusting terminal rate to 5.25-5.50% and would remain high throughout the year, which would led to outflow in risk assets.


2) US’ January inflation grows at faster pace amid rising shelter and energy prices

Inflation in the U.S. rose at a faster-than-expected pace in January 2023 amid rising shelter, gas and fuel prices, according to a report from the Labor Department on Tuesday.

The consumer price index for January rose 6.4% on an annual basis and 0.5% compared to December 2022, which were higher than forecast from economists surveyed by Dow Jones of 6.2% and 0.4%, respectively.

Meanwhile, core CPI which excludes volatile food and energy prices rose 5.6% from a year ago and 0.4% monthly, compared to estimates of 5.5% and 0.3%, respectively.


3) Fed could start pivoting in December after disappointing inflation data in January

After the report of the U.S. inflation data for January that picked up at a faster pace than expected, the market is now seeing Fed Funds Futures pricing in an upper bound terminal rate of 5.5%, up from 5.25% earlier.

The meeting in March has 90.8% odds for a 25bps hike, while in May the odds for another 25bps hike is 74.8%. Though still divided between raise or keep in June’s meeting, the higher odds fall to a 25bps raise and will remain at 5.25-5.50% until the first cut which is expected to be in December 2023 by 25 bps.