In today’s briefing:
- Has The US Fed Already Paused Its QT and ‘Pivoted’?
- PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead
Has The US Fed Already Paused Its QT and ‘Pivoted’?
- US Fed has injected a positive US$167bn into markets so far in Q4, 2022. This partly reverses the US$1.1 trillion they withdrew in year up to September
- Based on US Fed projections of a further US$1.5-2 trillion of QT liquidity withdrawals, the S&P500 could skid lower to 3200 (i.e. minus 20% from here)
- QT has stalled, showing the operational difficulty of withdrawing cash. This may also reflect underlying concerns about US Treasury market liquidity. A pause/ pivot is coming, but its not now
PH Wins a Narrow Plurality, but PAS Is the Single Largest Party: Uncertainty Ahead
- Although Anwar-led Pakatan Harapan (PH) won a plurality as we expected, the Islamist PAS unexpectedly emerged as the largest Malay party, winning 49 seats (vs UMNO’s 26 and Bersatu’s 24).
- PH could attempt to form coalition with the Borneo Bloc (28 seats) plus a few smaller parties. A stabler alliance would involve PH joining PAS, given their leaders’ ABIM pasts.
- PN and BN could attempt to cobble an alternative alliance with the Borneo Bloc, but the latter will be wary of PAS being the largest party in it. Uncertainty ahead!
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