The investment strategy team of Krungthai Bank, or Krungthai CIO, recommends that investors gradually accumulate quality stocks and take on risk in the short term by buying when prices pull back, while keeping some liquidity on hand to assess the interest rate outlook after this week's FOMC meeting. This comes as risk assets remain under pressure from the US 10-year bond yield, which jumped 19 bps to 4.97%, and oil prices holding above 100 dollars per barrel, with Brent and WTI crude surging 8.7% and 9.4% to 104.6 and 100.1 dollars per barrel respectively, driven by risks to oil shipments through the Strait of Hormuz. Meanwhile, the Thai 10-year bond yield rose 11 bps to 2.35%, and gold prices fell 1.8% to 4,349 dollars per ounce. Overall, most global stock markets declined, with the S&P 500 down 0.8%, the Nasdaq down 0.7%, and the Dow Jones down 1.6%, while South Korea's stock market moved in the opposite direction on the strength of memory and semiconductor shares. For investment strategy, Krungthai CIO continues to overweight equities relative to Neutral over the medium term and recommends gradually accumulating Quality Growth stocks, semiconductors, and North Asian stock markets, while diversifying risk in the Core Portfolio and using the Healthcare sector to reduce volatility in the Satellite Portfolio, as well as the energy sector to cope with persistently high oil prices. On fixed income, it recommends investing in short- to medium-duration instruments to reduce risk from bond yield volatility, while using gold to help diversify risk. If the Dot Plot from the FOMC meeting points to a year-end interest rate of 4.00–4.25%, investors can gradually increase exposure to high-risk assets, but if it sits at 4.25–4.50% or bond yields accelerate sharply, they should continue to hold liquidity and wait for the market to reprice valuations first. Key factors to watch this week include the FOMC meeting outcome on September 16, the Bank of England meeting on September 17, where rates are expected to stay at 3.75%, and the Bank of Japan meeting on September 18, where rates are expected to rise to 1.25%.
US 10-year Treasury yield jumped 19 bps to 4.97% as risk assets came under pressure ahead of the FOMC meeting.
Thai 10-year government bond yield rose 11 bps to 2.35%, tracking the global bond selloff.
