Thailand’s SET Index closed at 1,366.37 points, increased 1.89 points or 0.14% with a trading value of 34.60 billion baht. The analyst stated that the Thai stock market settled in a positive territory as the market recognized the direction of rate cuts from the US Federal Reserve but had no additional positive factors to support the rise. Meanwhile, the University of Michigan Consumer Sentiment Index showed that consumers downgraded the 1-year and 5-year inflation forecasts, causing the bond yields and the US dollar to weaken.
The analyst expected the market to trade sideways tomorrow, while the closure of the US markets tonight could affect the index to move with limitations.
The National Bureau of Statistics revealed that profits of China’s major industrial firms have increased by 4.3 percent in the first four months of the year.
The growth rate matches that of the first quarter, with industrial firms generating a combined profit of 2.09 trillion yuan from January to April.
These figures pertain to industrial firms with an annual main business revenue of at least 20 million yuan (approximately 2.81 million U.S. dollars).
The United States’ national debt has surged to a new peak of $34.6 trillion in April, marking a $1.6 trillion increase since September 2023. Over the past four years, the total US debt has ballooned by 47%, an uptick of $11 trillion. Should the current trend persist, the US debt is projected to double within the span of eight years, jumping from $20 trillion in 2017 to $40 trillion by 2025.
If the Federal Reserve opts to maintain its current interest rates, the annual interest expense for the US could hit $1.6 trillion by the close of the year. Consequently, the US government is advocating for lower interest rates as a means to alleviate this mounting financial burden.
As per Bloomberg data, the market is currently factoring in only one interest rate reduction for the entirety of 2024. This is a notable decrease from the two cuts that were being anticipated just ten days earlier, following the April Consumer Price Index (CPI) data reflecting a 3.4% inflation rate.
The latest development aligns with the recent US Purchasing Managers’ Index (PMI) report on Thursday, which indicated that inflation pressures persistently persist. Market expectations have shifted, with five interest rate cuts removed from the equation since January.
Goldman Sachs CEO David Solomon expressed a contrasting view on Wednesday, forecasting no reductions in interest rates for the year ahead.
BOJ Governor Kazuo Ueda emphasized the cautious approach the central bank will take with its inflation-targeting frameworks, acknowledging the unique challenges Japan faces after years of ultra-easy monetary policy, while also highlighting the progress made in moving away from zero and boosting inflation expectations.
To achieve sustainable and stable 2% inflation, Ueda stated that the BOJ will proceed cautiously, aligning with other central banks with similar frameworks. He noted that while Japan encounters challenges similar to its counterparts, some are uniquely difficult, such as accurately estimating the neutral interest rate due to near-zero short-term interest rates prevailing for the past three decades.
A top official at the European Central Bank (ECB), chief economist Philip Lane, shared with the Financial Times that while the ECB is prepared to decrease interest rates in the coming month, a restrictive policy stance must be maintained throughout this year due to wage growth projections not normalizing until 2026.
Lane implied that the ECB is likely to fulfill its promise of a rate reduction on June 6, with expectations in the market now adjusted to anticipate only one additional cut for this year. He emphasized the importance of remaining within a certain level of restrictiveness while potentially easing restrictions to a certain extent.
Regarding future policy meetings, Lane did not directly address the July session, but a number of ECB policymakers, including board member Isabel Schnabel, have suggested that a second rate adjustment should not occur too hastily. Lane highlighted that discussions around normalizing policy could take place once wage growth significantly slows down next year.
