Krungsri Securities (KSS) expected Thailand’s SET Index to trade weaker at 1,380-1,385 points, pressured by higher-than-expected US inflation rate in January at 3.1% YoY, which led the market to believe that the Fed will maintain interest rate at a higher level for longer. Meanwhile, US 10-year bond yield rose above 4.3%, a negative movement to the stock market.
However, the analyst expected the index could bounce back from higher crude oil prices that benefit energy stocks, and also buying pressure on stocks with unique catalysts.
The forecast for the first Fed’s rate cut in 2024 is now pushing back from June to July after January CPI inflation rises at a higher-than-expected rate.
The Consumer Price Index (CPI) for the US rose 3.1% YoY in January 2024, which was higher than the estimate of 2.9%. Prices also rose 0.3% MoM, higher than 0.2% expected.
Meanwhile, Core CPI, which excluded volatile food and energy prices, rose 3.9% YoY, compared to 3.7% expected. On a monthly basis, core CPI rose 0.4%, compared to 0.3% expected.
The market is now pricing in just four rate cuts in 2024 after the report of January CPI, down from 6-7 cuts expected earlier this year. Meanwhile, the Federal Reserve maintained its view for just three cuts this year.
Odds for a cut in March are now below 10%, while chances in May and June are also plummeting.
The Fed said earlier that the central bank wanted to see inflation at a sustainably low level before starting to cut interest rates.
