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Long Live The King

12 October 2016 by lberuti

Markets do not usually follow every footsteps of royals, but today there was a marked interest for the world’s longest reigning monarch, King Bhumibol. The king of Thailand’s reign begun more than 70 years ago, and he is seen by many as a unifying presence in a country which has seen 19 coups (or attempted coups) since 1932. Since the royal palace announced on Sunday that the 88-year monarch’s health was unstable, the Thai currency has fallen every session and the 5-year risk premium of the kingdom of Thailand has risen every day. The latter has been pushed 17bps wider to 100bps. The increased probability of rate hike in the US was certainly a contributing factor to this poor performance, but fears about political stability in the country appear to have been the main driver. Meanwhile, the broader credit market struggled to find a direction, ahead of the release of the minutes of the last FOMC tonight. Credit indices stayed in very narrow ranges throughout the session and closed unchanged on the day.