Kaohoon Morning Brief – 15 June 2023

1) FSS expects mixed movement in SET Index as Fed holds rate, but hints for more hikes

Finansia Syrus Securities (FSS) expected Thailand’s SET Index to move in a sideways trend within the range of 1,550-1,570 points, despite the Fed holding rates at 5-5.25%, the dot plot showed two more hikes by the end of this year and rate cuts would be next year. This gave a mixed feeling to the market. FSS expected domestic factors lie on the development and hopes for the forming of the new coalition government in Thailand. Most of the MPs should be approved by the Election Commission next week, which should give the market a slight positive sentiment.


2) Fed holds rates in June but hints for two more hikes by end of 2023

The U.S. central bank left interest rates unchanged at the meeting on Wednesday, but signalled that there could be two small hikes by the end of this year.

The Federal Reserve maintained its policy rate at 5-5.25%, in line with expectations from the market. Fed Chair Jerome Powell described in a press conference after the meeting, stating that U.S. growth and the job market are holding up better than expected under the weight of the aggressive monetary policy tightening this past year.

The market believed there will be two more hikes for a total of half a percentage point by the end of this year as the Fed reacted to a stronger-than-expected economy and a slower decline in inflation.


3) China’s central bank cuts medium-term lending facility by 10bps

The People’s Bank of China (PBOC) on Thursday cut the borrowing cost of its one-year medium-term lending facility (MLF) by 10 basis points, as Beijing tried to give a push to its slow economic recovery.

China’s central bank brought its medium-term policy loans worth 237 billion yuan to 2.65%, from 2.75% previously.

The cut came just a few days after the central bank cut its two key short-term policy rates, which showed that Beijing is now very concerned about its economy that saw slower-than-expected growth after the authorities terminated zero-Covid policy.

A series of cuts this week gave the market a signal that the central bank could cut its benchmark lending rates next week as well.