China Equities Maintain Short-term Bullish Momentum Ex-post Politburo and FOMC

The market’s reaction so far has been positive in terms of risk-on behaviour toward China equities and their proxies (Hang Seng Index, Hang Seng TECH Index & Hang Seng China Enterprises Index) ex-post press release on the outcome of the July’s Politburo meeting that concluded on Monday, 24 July after the close of the Asian session as well as yesterday’s ex-post US central bank, Federal Reserve’s FOMC meeting on its interest rate policy.

U.S. GDP Growth Accelerated in Q2

Q2 U.S. GDP came in at 2.4% (annualized rate), up from a 2% growth in the prior quarter. Much of that growth was driven by consumer spending, and non-residential investment.

Euro Sinks as ECB Signals a September Pause is Possible

The ECB raised rates for potentially the final time in the tightening cycle on Thursday, although it refused to give any indication of what will happen going forward.

US: Real GDP Expanded Solidly in Q2, Beating Expectations 

The U.S. economy expanded for a fourth consecutive quarter in 2023Q2, marking a full year of growth since the brief slowdown at the start of 2022. The resilience in consumer spending – which makes up roughly two thirds of GDP –  has kept the economy growing solidly during the first half of the year. With the labor market remaining strong, consumers have been able to weather the headwinds of higher prices and higher interest rates so far.

Sunset Market Commentary

As was the case for the Fed yesterday, the ECB as expected raised its policy rate by 25 bps, bringing the depo rate to 3.75%. The decision was unanimous, Lagarde said at the press conference. Contrary to the Fed, the ECB slightly amended/softened its inflation assessment in the policy statement.

European Central Bank: Dovish and Data Dependent

The European Central Bank (ECB) raised its Deposit Rate 25 bps to 3.75% at today's monetary policy announcement, matching widespread expectations. More significantly, the ECB sounded more downbeat on the economy and, in contrast to recent meetings, was cautious in offering any guidance about policy beyond this July meeting.

ECB Review: A Decisive Maybe

Today, ECB decided to hike its three policy rates by 25bp. The deposit rate is now 3.75% which was widely anticipated. ECB left no clear guidance on a potential rate hike in September, as they will assess the strength of the incoming data.

RBA Board to Raise Cash Rate by 25 Basis Points at August Meeting, Maintain Tightening Bias

The Reserve Bank Board meets next week on August 1. Westpac has consistently argued that a further increase in the cash rate should be the appropriate policy response at the August meeting and we confirm that view.

Bank of Japan Unexpectedly Made an Admittedly Little Tweak to Yield Curve Control

Dubbed governor “Ueda’s first surprise”, the Bank of Japan this morning unexpectedly made an admittedly little tweak to its Yield Curve Control programme. The central bank loosens its grip on bond yields a bit by allowing the 10-y yield to move more flexibly around the unchanged 0% +/- 50 bps cap.

No Major Risk-off after BoJ's Creative YCC Flexibility Tweak

Bank of Japan maintained its ultra-loose monetary policy but issued a lukewarm hawkish statement to introduce a “flexible” Yield Curve Control programme on the 10-year JGB yield.