US Government Bond 2Y

The yield-suppressing effect of the expanded long-term Treasury buyback measures announced by the U.S. Treasury on the 19th faded in just one day. The Treasury unveiled an unusual step of raising the per-operation cap for buybacks of 10- to 30-year Treasuries to at least more than double, at 4 billion dollars, or about 640 billion yen. On the day of the announcement, buying of long-term bonds swelled and yields fell sharply. However, inflation concerns remained persistent amid fiscal anxiety and higher crude oil prices caused by worsening conditions in the Middle East, and from the 20th onward rates turned higher. Concerns are growing that there is no way to prevent the expansion of the federal debt, which has topped the 40 trillion dollar mark, or about 6.4 quadrillion yen, for the first time. The fact that the buybacks, running from September through November, are merely a stopgap measure is also seen as a factor. Treasury Secretary Bessent mentioned on U.S. television on the 20th the possibility of further raising the cap, but some in the market are critical, saying it would instead reveal the dire situation and prove counterproductive. Securing the funds needed for the buybacks is expected to involve issuing short-term bills, which carries the risk of pushing up short-term rates and worsening financial institutions' funding conditions. Federal Reserve Chair Warsh, who took office in May, is opposed to supporting Treasury prices for fiscal assistance purposes, but market speculation is emerging that the Fed could become the buyer to avert a surge in short-term rates.

In New York trading on the 7th, the S&P 500 index hit a fresh all-time high, the dollar fell against major currencies, and Treasury yields declined after the July US employment report came in unexpectedly weak. The Labor Department reported that nonfarm payrolls fell by 23,000 in July, defying market expectations for an increase, while the unemployment rate edged down to 4.1 percent. However, the labor force participation rate slipped to 61.4 percent, near its lowest level in about five and a half years. The data pushed back expectations for a Federal Reserve rate hike in September, with the CME FedWatch Tool showing the probability of a September hike dropping to around 44 percent. The dollar fell 0.57 percent against the yen to 157.56 yen, while the euro rose 0.39 percent against the dollar to 1.1568 dollars. The dollar index, which measures the greenback against a basket of major currencies, slipped 0.44 percent to 99.50. The yield on the 10-year Treasury note fell 1.44 basis points to 4.656 percent, and the 2-year yield dropped 4.35 basis points to 4.202 percent. The S&P 500 closed 0.62 percent higher at 7,757.64, posting a weekly gain of 3.58 percent, its biggest since mid-April. The Nasdaq Composite jumped 1.30 percent to 26,690.62, and the Dow Jones Industrial Average added 0.28 percent to 54,036.93. Gold futures rose 2.3 percent to 4,399.70 dollars an ounce, a seven-week high, while crude oil futures extended gains amid Middle East uncertainty, with West Texas Intermediate crude up 89 cents at 78.18 dollars a barrel.

US stocks and bonds rallied after a weaker-than-expected jobs report eased fears of an imminent Federal Reserve rate hike. The US payroll report showed employment fell by 23,000 jobs, confounding expectations for an increase of 80,000. The Nasdaq rose 0.7% in early trading, while Treasury yields fell, with the 2-year note yield dropping 7 basis points to 4.176% and the 10-year yield down 5 basis points to 4.61%. The dollar index fell 0.5% to 99.43, giving the yen a reprieve as it strengthened to 157.20 per dollar. MSCI's All-World index rose 2.4% for the week, the most in three months, and Europe's STOXX 600 was up 0.6% on the day and 2% for the week.

Kasikorn Research Center reports that the Thai baht strengthened to a six-week high of 33.05 per dollar before adjusting to 33.07 to 33.09 per dollar this morning, compared to yesterday's close of 33.21 per dollar. The appreciation aligns with global gold prices nearing 4,300 dollars per ounce amid hopes for progress in US-Iran talks on opening the Strait of Hormuz. Meanwhile, the dollar was pressured by a two-basis-point drop in the two-year short-term bond yield to 4.18 percent, after US ADP private employment data and the ISM services index for July came in below expectations, reinforcing the view that the Federal Reserve will raise rates only once this year. The baht's trading range today is estimated at 33.00 to 33.15 per dollar, with factors to watch including the Middle East situation, foreign fund flows, the yen's direction, and weekly US jobless claims.

The Dow Jones Industrial Average extended its gains on the fourth, closing up 907.47 points at 54,085.88, marking a second consecutive record high. Hopes for easing Middle East tensions and strong corporate earnings provided support, with the index briefly surging nearly 1,100 points at one stage. The tech-heavy Nasdaq Composite also finished 671.09 points higher at 26,584.99. Volume on the New York Stock Exchange rose by 157.17 million shares from the previous day to 1.438 billion shares. In currency markets, the yen weakened, with the dollar trading at 157.71 to 157.81 yen as of 5 p.m., a decline of 0.58 yen from the same time the previous day. In the bond market, buying prevailed amid a drop in crude oil futures, pushing the yield on the 10-year U.S. Treasury note down 0.07 percentage point to 4.61 percent, while the 2-year yield fell 0.04 percentage point to 4.20 percent. In commodities, West Texas Intermediate crude for September delivery on the New York Mercantile Exchange dropped 4.57 dollars to settle at 75.77 dollars a barrel, its lowest in about three weeks, while gold futures for December delivery on the COMEX rebounded after three sessions, rising 62.10 dollars to 4,152.60 dollars an ounce.

The Thai stock market this morning has a chance to recover, supported by better-than-expected US economic data and an easing of the Middle East situation, reflected in Brent crude oil prices dropping 7% to close below 84 dollars per barrel. Meanwhile, yields on US 2-year and 10-year government bonds also declined. On the domestic front, the market is mainly watching listed companies' earnings reports, with support seen at 1,615 points and resistance at 1,640 points.

U.S. stocks climbed Monday as investors responded to signs of easing tensions between Washington and Tehran. The Dow Jones Industrial Average gained about 1.2%, while the S&P 500 and Nasdaq Composite each rose roughly 1%. Nine of the 11 S&P 500 sectors advanced, led by communication services, while energy stocks lagged as oil prices fell on hopes for progress in U.S.-Iran discussions. Reuters reported that Brent crude dropped more than 5% as investors assessed the possibility of renewed diplomacy. Treasury yields also moved lower, with the two-year yield slipping 1 basis point to 4.25%, the 10-year yield declining 2 basis points to 4.69%, and the 30-year yield falling 3 basis points to 5.23%. Economic data offered a mixed signal, as the final U.S. manufacturing PMI for July came in at 53.9, slightly above the preliminary 53.8 reading, while the report pointed to softer production and sales growth.