1) KSS expects SET Index to test 1,570 resistance level in response to US inflation slowing down
Krungsri Securities (KSS) expected Thailand’s SET Index to test the resistance level at 1,570-1,575 points in response to the U.S. inflation rate that rose at a slowest pace in two years at 4%. This led to an expectation that the Fed will hold rates at 5-5.25% in the meeting later today. Meanwhile, the announcement from China’s central bank in cutting its short-term key lending rate to 1.9% was also positive to the market as well.
2) US inflation rise at slowest pace in two years
The U.S. consumer price in May rose at a slowest pace in more than two years, adding to the probability for the Federal Reserve to maintain interest rates at the two-day meeting, starting Tuesday.
Consumer Price Index for May rose 4.0% from the same period of last year, the smallest increase since March 2021 and after a 4.9% rise in April.
Inflation rose 0.1% on a monthly basis after an increase by 0.4% in April. Gasoline prices dropped 5.6%, while electricity declined for a third straight month. However, food prices increased 0.2%.
3) Markets nearly 100% expect Fed to hold rates
According to CME FedWatch Tool, the odds for the U.S. central bank to skip rate hikes this week was around 70% prior to the inflation report. The probability for a pause is now rising to 95% after the market saw that inflation has slowed down. However, there are more than 50% probability that the Fed could raise rates by another 25 basis points in the next meeting in July.
