Kaohoon Morning Brief – 14 June 2023

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.