"DBS Vickers Securities (Thailand)"

In our Economic & Strategy note this month, we had said that the probability of a recession/slowdown in the next few months as indicated by inverted yield curve in the US was elevated but probably overstated. 

The US Federal Reserve is in the limelight.

It seems that global investors still have a negative view of developed market bonds. The 10 year US Treasury yield continues to rise further after breaching the key 2.7 per cent level. Our DBS Bank foreign exchange strategist has issued a report warning that technically the US yield should test the 3 percent threshold in the medium term.

Net liquidity injection into the global financial system could drop to zero or negative by the end of this year, according to a DBS Bank economist. The Fed’s balance sheet reduction plan is to increase the tapering amount gradually each quarter to reach US$50 billion a month in October 2018, and maintain it at that level thereafter.

DBS’s fourthquarter strategy launched earlier this month has Thailand and Malaysia markets as overweight as both are considered laggards.