Thailand cuts GDP growth outlook as exports weaken

BANGKOK, April 25 (Reuters) – Thailand’s finance ministry has lowered its 2023 economic growth outlook to 3.6% from 3.8% projected earlier, on expectations of a fall in exports as global demand weakens, officials said on Tuesday.

Exports, a key driver of Thai growth, are expected to drop 0.5% this year, compared with a previous forecast for a 0.4% rise, Pornchai Thiraveja, head of the ministry’s fiscal policy office, told a briefing.

“A global slowdown is a drag on Thailand’s economic growth… and exports might not increase as thought,” he said.

Public consumption is expected to fall 2.1% this year due to an expected delay in Thailand’s 2024 fiscal budget as the country holds an election on May 14, Pornchai said.

However, growth in Southeast Asia’s second-largest economy, is expected to be propped up by tourism and domestic consumption, he said.

The economy expanded 2.6% last year and the recovery has lagged that of other Southeast Asian nations, with tourism just starting to rebound last year with 11.15 million foreign arrivals.

Thailand is expected to receive 29.5 million foreign tourist arrivals this year, with the return of Chinese visitors, versus 27.5 million projected earlier, Pornchai said.

Pre-pandemic 2019 saw a record of nearly 40 million foreign tourists, who spent 1.91 trillion baht (USD 55.62 billion). Tourism accounted for about 12% of gross domestic product (GDP).

The baht is expected to average 33.17 per dollar this year versus a previous forecast of 32.5, with the dollar supported by US rate hikes, fiscal policy advisor Wuttipong Jittungsakul said.

The ministry predicted average headline inflation at 2.6% this year, down from 2.8% projected earlier, and against a 24-year high of 6.08% last year.

(Reporting by Orathai Sriring, Kitiphong Thaichareon and Satawasin Staporncharnchai; Editing by Kanupriya Kapoor and Sam Holmes)

Oil prices stable as investors ponder China demand, rate hikes

SINGAPORE, April 25 (Reuters) – Oil prices held steady on Tuesday as investors weighed strong holiday travel in China that could boost fuel demand against the prospect of rising interest rates elsewhere, slowing economic growth.

Brent crude fell 3 cents to USD 82.70 a barrel at 0620 GMT, while US West Texas Intermediate crude also eased 3 cents to USD 78.73 a barrel.

Oil futures had risen more than 1% on Monday on optimism that holiday travel in China would increase fuel demand in the world’s second-biggest economy.

Bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries. Still, the numbers remain far off pre-COVID levels, with long-haul airfares soaring and not enough flights available.

“Investors expressed optimism that Chinese holiday travel would boost fuel demand in the world’s largest oil importer,” said Leon Li, an analyst at CMC Markets.

“In addition, expectations for a slowdown in US gross domestic product growth in the first quarter prompted a pullback in the US dollar index yesterday, supporting gains in oil prices.”

A weaker US dollar can help global demand for oil by making it cheaper for holders of foreign currencies in other countries.

However, investors remain wary about central banks in the United States, Britain and the European Union potentially raising interest rates further to curb inflation, which could slow economic growth and dent energy demand.

The US Federal Reserve, the Bank of England and the European Central Bank are all expected to raise rates when they meet in the first week of May.

“(There is a) still hawkish Federal Reserve, recession predictions in the West in the second half of the year, potential for lower than expected oil demand recovery in China and still robust Russian oil exports despite the official guidance of a 500,000 barrels per day (bpd) cut,” said Suvro Sarkar, energy sector team lead at DBS Bank.

“However, we believe oil prices will bounce back to USD 85 per barrel levels and above again in coming months as the OPEC+ cut kicks in and more evidence of oil demand growth from China comes in.”

Russia’s Deputy Prime Minister Alexander Novak said in February the country would reduce production by 500,000 bpd in March, then in early April promised to extend cuts until the end of the year.

Trading and shipping sources however say that oil loadings from Russia’s western ports in April will rise to the highest since 2019, above 2.4 million bpd, despite Moscow’s pledge to cut output.

Meanwhile, investors on Tuesday awaited industry data on US oil stockpiles. Analysts polled by Reuters expected the data to show US crude inventories fell by about 1.7 million barrels in the week to April 21.

US government data on inventories is due on Wednesday.

(Reporting by Stephanie Kelly and Emily Chow in Singapore; Editing by Sonali Paul, Kenneth Maxwell and Lincoln Feast.)

Oil dips 2% on economic woes and stronger dollar

HOUSTON, April 25 (Reuters) – Oil dropped 2% to its lowest this month on Tuesday after two sessions of gains, as deepening concerns of an economic slowdown and a stronger dollar outweighed hopes of higher Chinese demand.

Brent crude fell by USD 1.96, or 2.4%, to settle at USD 80.77 a barrel, its lowest close since March 31, before OPEC announced plans to cut production.

US West Texas Intermediate crude dropped USD 1.69, or 2.2%, to close at USD 77.07, also its lowest this month.

On Monday, both contracts rose by more than 1%.

US consumer confidence dropped to a nine-month low in April, feeding worries about a recession the day after regional lender First Republic (FRC) reported a flight in deposits of more than USD 100 billion, stoking fears of a potential banking crisis.

“Oil prices looked as if they were going to mount a rally before old banking worries re-emerged,” said Phil Flynn, an analyst at Price Futures Group.

The dollar rose on deepening worries about corporate earnings and the global economy. A stronger dollar pressures oil demand by making the commodity more expensive for buyers holding other currencies.

Gold prices also were flat as the dollar strengthened, while US stocks fell as weak earnings fanned economic fears.

Investors remained wary that possible interest rate hikes by inflation-fighting central banks could slow economic growth and dent energy demand in the United States, Britain, and the European Union.

The US Federal Reserve, the Bank of England, and the European Central Bank are all expected to raise rates at their coming meetings. The Fed meets May 2-3.

Oil traders also worried that weak refining margins globally could force refiners to curb oil buying.

“The near-term pressure has been from rising interest rates and refinery run rate margins contracting, which could be a sign demand is slipping,” said Dennis Kissler, senior vice president of trading at BOK Financial

Early in the session, oil prices rose, supported by optimism that holiday travel in China would boost fuel demand and by expectations of a drop in US crude inventories.

US crude oil stocks fell by about 6.1 million barrels in the week ended April 21, according to market sources citing American Petroleum Institute figures on Tuesday. Analysts had expected crude inventories to fall by about 1.5 million barrels.

Gasoline inventories also fell last week, while distillate inventories rose, the sources added. Official stockpiles data from the US government is due Wednesday.

Involuntary and planned supply cuts also lent support. Iraq’s northern oil exports have shown little sign of an imminent restart after a month-long standstill, while members of the OPEC+ producer group prepared for the start of voluntary output cuts in May.

(Reporting by Arathy Somasekhar; Additional reporting by Alex Lawler, Stephanie Kelly, and Emily Chow; Editing by Christina Fincher, Barbara Lewis, David Goodman, David Gregorio, and Sonali Paul)

South Korea to avoid recession … just

April 25 (Reuters) – As world markets tread water ahead of US mega-tech earnings and the Bank of Japan meeting this week, investors on Tuesday will have one eye on the first estimate of South Korean GDP growth in the first quarter and another on the latest twists in key Asian currencies.

The declining value of the yuan, particularly against the euro, continues to cast doubts over China’s post-Covid recovery, while Hong Kong’s central bank is battling increasing pressure on its financial system and exchange rate.

The consensus view in a Reuters poll of economists is that South Korea’s economy grew 0.2% in the first quarter after shrinking 0.4% in the final quarter of last year, narrowly escaping recession and underscoring the challenge for policymakers trying to shore up growth.

On a year-on-year basis, GDP likely grew 0.9% in the first quarter, the poll showed, down from 1.3% in the fourth quarter of last year.

One of the biggest drags on growth could be trade. Exports to China, the country’s largest trading partner, plunged 33.4%.

On the face of it, however, China’s economic rebound since its post-pandemic reopening looks strong. Economic surprises are the most positive in 17 years, and a host of investment banks have bullish calls on Chinese growth and assets.

But Chinese geopolitical risk – Taiwan, U.S. relations, cyber warfare, spy balloons, Beijing’s close ties with Moscow – is large and growing.

China on Monday may have said it respects the status of former Soviet member states as sovereign nations, but the unease across Europe sparked by comments to the contrary by China’s envoy to Paris will not dissipate quickly.

China’s yuan on Monday fell to a 19-month low against the euro through 7.60/euro. It is down five straight weeks against the euro, the longest losing streak since 2018, and while the euro is on a tear globally, perhaps politics are figuring more prominently in investors’ thinking.

The Hong Kong Monetary Authority, meanwhile, is draining money market liquidity to intervene in the FX market and support its currency.

The HKMA waded into the currency market last Wednesday and bought HKD 6.9 billion (USD 881 million) to prevent the HK dollar from breaking through the weak end of its trading band at 7.85 per U.S. dollar.

In doing so though, the HKMA’s aggregate balance has slumped to below HKD 50 billion, the lowest level since 2008. Banks’ aggregate cash balance at the HKMA, a key measure of cash in the banking system, was more than HK$300 billion as recently as June and more than HKD 450 billion less than two years ago.

Tuesday will be a quiet day in Australia and New Zealand markets – they will be closed for the Anzac Day holiday.

Here are three key developments that could provide more direction to markets on Tuesday:

– South Korea GDP (Q1)

– Japan services PPI (March)

– Hong Kong trade (March)

(By Jamie McGeever; Editing by Josie Kao)

1-month Treasury yields rise from Oct. lows as debt ceiling worries grow

NEW YORK, April 24 (Reuters) – One-month Treasury yields rose from their lowest levels since October on Monday as investors appeared to grow increasingly concerned about a potential standoff over the US debt ceiling.

The yield of the one-month Treasury, which started the month near 4.7%, gained 9 basis points to 3.45%. Three-month Treasuries, meanwhile, fell 6 basis points to 5.05%, roughly in line with where they were trading in mid-April.

Bond yields move in the opposite direction of prices.

“People are focusing increasingly week-to-week on the summer and the debt ceiling deadline, and that is increasingly impacting what could be some idiosyncratic moves in the Treasury market,” said Fran Rodilosso, head of fixed income ETF portfolio management at VanEck. “There’s a growing sense that there’s not a lot of common ground this time.”

US tax collections are currently trending roughly 30% below last year’s level, raising the possibility that the United States will reach its borrowing limit as soon as the first half of June rather than later in the summer, according to Goldman Sachs Global Investment Research.

The House of Representatives is expected to vote on a Republican-led debt and spending bill this week.

Market concerns over a debt default pushed the price of insuring Treasury debt through credit-default swaps to their highest levels in over a decade last week.

The yield on 10-year Treasury notes was down 5.7 basis points to 3.515%, while the yield on the 30-year Treasury bond was down 4.9 basis points to 3.729%.

The Chicago Fed National Activity Index slipped 0.19 in March, the same decline it posted in February, and slightly above market expectations for a 0.20 decline. The April reading of the Dallas Fed Manufacturing Index, meanwhile, was -23.4, nearly double the -12.0 economists were predicting and down from -15.7 in March.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at -62.8 basis points.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down 4.9 basis points at 4.142%.

April 24 Monday 3:37PM New York / 1937 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	4.925	5.0529	-0.064
Six-month bills	4.8425	5.0433	-0.020
Two-year note	99-129/256	4.1436	-0.046
Three-year note	99-196/256	3.8339	-0.062
Five-year note	100-24/256	3.6036	-0.061
Seven-year note	100-102/256	3.5593	-0.061
10-year note	99-224/256	3.5147	-0.057
20-year bond	100-68/256	3.8554	-0.052
30-year bond	98-32/256	3.7295	-0.049

DOLLAR SWAP SPREADS
	Last (bps)	Net Change (bps)
US 2-year dollar swap spread	27.00	0.00
US 3-year dollar swap spread	18.25	1.00
US 5-year dollar swap spread	7.50	0.00
US 10-year dollar swap spread	-0.50	-0.25
US 30-year dollar swap spread	-41.00	-0.25

(Reporting by David Randall; editing by Jonathan Oatis and Kirsten Donovan)

Investors flock to one-month bills on US debt ceiling jitters, shun others

April 24 (Reuters) – Rising concerns that the US Treasury Department could hit its debt limit in the coming months are leading investors to shun certain Treasury bills and pour into others as they seek out low risk places to park cash.

Congress will need to raise the US debt ceiling or risk a catastrophic debt default, with analysts predicting the Treasury is most likely to run out of funds in July or August.

As a result, some investors are avoiding debt that comes due in this timeframe. But they are also seeking safe places to park cash. That has led one-month bill yields to tumble, and the spread between one-month and three-month bills to expand to its widest level since the one-month bills were introduced in 2001.

“You’re seeing this demand for the very front-end … and then the three- to four-month part of the bill curve is quite cheap because of these debt ceiling concerns,” said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

“There’s a lot of cash on the sidelines. Money left the regional banking systems and made it to the larger banks and then from there to money market funds. Money market funds are the highest they’ve been and there’s a dearth of supply,” Rajappa added.

The failure of two regional banks, including Silicon Valley Bank in mid-March, has increased demand for Treasury bills on concerns about the safety of uninsured bank deposits. But the Treasury has cut its issuance of short-term debt as it bumps up against its debt limit.

“The market is nervous and is avoiding the debt ceiling issues and has unfortunately nowhere to go because bill supply continues to be cut,” said Gennadiy Goldberg, a senior interest rate strategist at TD Securities in New York.

Yields on one-month bills were last at 3.362%. after reaching 3.206% last Thursday, the lowest since Oct. 20. They are now trading around 130 basis points below the Fed funds rate, the largest gap since 2008.

Yields on three-month bills, meanwhile, have increased to 5.113%, and are holding just below a 22-year high of 5.318% reached on Thursday. The gap between one-month and three-month bills has widened to a record at around 175 basis points.

The Treasury is expected to increase bill issuance once the debt ceiling is raised. Until then, investors are also likely to continue to make use of the Federal Reserve’s reverse repurchase agreement facility, which is seeing daily demand of around USD 2.25 trillion.

(Additional reporting by Stefano Rebaudo in London; Editing by Alex Richardson)

Japan’s 10-year yield nearly flat ahead of BOJ policy meeting

TOKYO, April 24 (Reuters) – Japan’s 10-year government bond was almost flat on Monday ahead of the Bank of Japan’s policy meeting towards the end of this week, as investors shrugged off comments from BOJ Governor Kazuo Ueda.

The 10-year JGB yield edged up 0.5 basis point (bp) to 0.465%.

Ueda said on Monday the central bank’s inflation forecasts must be “quite strong and close to 2%” in the coming year to consider tweaking yield curve control.

His comments come ahead of a two-day BOJ meeting that kicks off on Thursday, where the board will produce fresh quarterly growth and inflation forecasts.

Market participants expect that the BOJ will not make any changes to policy at the upcoming meeting, while some are still wary of the risk of a surprise, which would follow a policy tweak in December.

Yields on super-long dated bonds rose, with the 20-year JGB yield rising 1 bp to 1.130% and the 30-year JGB yield rising 2 bps to 1.355%.

The 40-year JGB yield rose 2.5 bps to 1.550%.

“Investors were cautions about trading bonds ahead of the BOJ’s policy meeting. Yields on super-long ends must have risen due to some supply and demand issues,” said Hiroshi Namioka, chief strategist and fund manager at T&D Asset Management.

The two-year JGB yield was flat at -0.040% and the five-year yield was unchanged at 0.155%.

Benchmark 10-year JGB futures rose 0.06 yen to 147.77, with a trading volume of 8,638 lots.

(Reporting by Junko Fujita; Editing by Sonia Cheema)

US 3-month T-bill yield jumps 12 bps

April 24 (Reuters) – The yield on the 3-month US Treasury bill jumped in early London trade on Monday as unease about the US debt ceiling kept selling pressure on short-dated bonds sustained.

Investors want to avoid bills that will mature when there is a risk that the US could hit its debt ceiling, which might occur in late July or August.

Legislative standoffs over the debt limit this last decade have been resolved before they could ripple into markets, but investors worry the Republican party’s narrow majority in Congress could make it harder to reach a compromise this time.

The nonpartisan Congressional Budget Office has forecast that the so-called “X-date,” when the government can no longer pay all its bills, would come between July and September.

The 3-month bill yield rose 12 basis points to 5.237%. It hit its highest level since January 2001 at 5.318% last Thursday.

(Reporting by Stefano Rebaudo, editing by Alun John)

PH interagency panel keeps 2023 to 2028 GDP growth targets

MANILA, April 24 (Reuters) – The Philippines maintained its economic growth target for 2023 at 6.0% to 7.0%, a government inter-agency panel said on Monday, citing momentum from increased domestic demand and better labour conditions.

The economy is seen to grow 6.5% to 8.0% for 2024 to 2028, the inter-agency panel known as the Development Budget Coordination Committee (DBCC) announced in a news conference.

The DBCC said it took into consideration the risks posed by geopolitical and trade tensions, a possible global economic slowdown, as well as weather disturbances in the country.

It also expected inflation to register at 5% to 7% this year, returning to within the government’s 2% to 4% target by the fourth quarter, saying it was committed to taking proactive measures to bring inflation down.

Inflation slowed for a second straight month in March to 7.6%.

The DBCC expected the peso to move between 53 and 57 to the dollar this year.

(Reporting by Neil Jerome Morales; Editing by Martin Petty)

S. Korean shares fall to 2-week low on earnings, geopolitical woes

SEOUL, April 24 (Reuters) – Round-up of South Korean financial markets:

** South Korean shares fell for a third straight session on Monday amid geopolitical worries and caution ahead of major company earnings. The Korean won weakened, while the benchmark bond yield fell.

** The benchmark ended down 20.89 points, or 0.82%, at 2,523.51, marking its lowest closing level since April 10.

** South Korea’s key chipmakers and automakers, among others, are scheduled to report their first-quarter results later this week.

** Geopolitical worries grew in local markets after President Yoon Suk Yeol’s remarks last week over tension in the Taiwan Strait, saying that the South Korean government “absolutely opposes” China’s attempt to change the status quo by force.

** “There were profit-taking pressures and some supply-demand issues for certain stocks,” said Park Gwang-nam, analyst at Mirae Asset Securities.

** Five stocks fell nearly 30% to their daily lower limits, including Seoul Citi Gas, Daesung Holdings Co Ltd, Samchully Co Ltd, Sebang Co Ltd and Daol Investment & Securities Co Ltd. There was no clear common cause for the fall.

** Among the index heavyweights, chipmakers, battery makers and online service providers fell but automakers gained. Of the total 933 issues traded, 206 shares rose.

** Foreigners were net sellers of shares worth 38.4 billion won (USD 28.74 million).

** The won ended onshore trade 0.49% lower at 1,334.8 per dollar, after falling as much as 0.67% to hit a near five-month low of 1,337.1.

** In money and debt markets, June futures on three-year treasury bonds KTBc1 rose 0.03 point to 105.05.

** The most liquid three-year Korean treasury bond yield fell by 2.2 basis points (bps) to 3.246%, while the benchmark 10-year yield fell by 3.7 bps to 3.308%.

(USD 1 = 1,336.0100 won)

(Reporting by Jihoon Lee; Editing by Sonia Cheema)

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