US Grows, China Slows

The initial forecast for this year - US recession and Chinese rebound - is not happening. On the contrary, the US is growing, and China is slowing. At this point, the Chinese government has no choice but to regain people’s and investors’ confidence if it doesn’t want to become too old before becoming rich enough.

Japanese Data Showed a Mixed Picture

Japanese data showed a mixed picture this morning. Tokyo inflation ex fresh food prices, the BOJ’s preferred inflation measure, gained slightly from 3.1% Y/Y to 3.2% Y/Y in June. The increase was mainly due to higher electricity prices as authorities allowed utilities to raise prices this month.

Bullish US Stocks and Bearish JPY at Risk of Pain Trade in H2

The moments of “higher volatility” have been captured in the bond market this time around as global sovereign bond yields among the G-20 nations (except for Japan & China) have spiked up significantly yesterday, 29 June; bond yields increase led to bond prices decrease.

Japanese Yen Flirts with 145, Core CPI Ticks Upwards

Tokyo Core CPI, a key inflation gauge, moved slightly higher in June. The index came in at 3.2% y/y, up from 3.1% in May but below the consensus of 3.3%. This marks the 13th straight month that Tokyo Core CPI has remained above the Bank of Japan’s 2% target.

Canada's Economy Stalls in April, But Swift Rebound Likely in May

Canadian GDP surprised to the downside, but details didn't flash any major warning signs. With today's print and the flash estimate for May, second quarter GDP growth is tracking around a trend pace. This would once again overshoot the Bank of Canada's (BoC) most recent 1.0% annualized estimate for Q2 growth.

US: Income Higher, Spending Flat, Prices Slowing but Still Elevated in May 

Personal income grew 0.4% month-on-month (m/m) in May, just above market expectations (0.3%). This marked a slight acceleration from the prior month's downwardly revised gain of 0.3% (previously 0.4%). Gains were led by compensation to employees, which rose 0.5% in May – up from 0.4% in April.

Sunset Market Commentary

EMU June inflation data brought no big surprise anymore in the wake the of the releases from Germany and other EMU member states earlier this week/today. The story in the meantime is well-known. Headline inflation declined further from 6.1% to 5.5% mainly driven by lower energy prices.

Weekly Focus

The first half of 2023 was characterized by economic growth surprising to the upside, but also inflation proving stickier than expected. As such, when policymakers from around the world gathered in Sintra this week for the ECB's Forum on Central Banking, it was no surprise that (aside from Bank of Japan), central banks maintained a tightening bias towards H2.

Week Ahead – Will US Nonfarm Payrolls and RBA Decision Rock the Boat?

Markets have been left somewhat bruised from a fresh round of hawkish gunfire from central bank chiefs, so nerves are running high ahead of the June jobs report out of America. The ISM PMIs and the Fed meeting minutes are also expected to send speculation about a July rate hike into overdrive. However, Australia’s Reserve Bank might decide against raising interest rates thrice in a row. The yen, meanwhile, will be hoping that Japanese data will provide some relief from its selloff.

Will RBA Surprise the Market for a Third Time?

On Tuesday, at 04:30 GMT, the Reserve Bank of Australia (RBA) will announce its July monetary policy decision. After two consecutive surprise hikes, most market participants believe that policymakers will step to the sidelines this time, but economists foresee a 25bps hike by a very slim majority. Will the RBA go against market bets for the third time in a row?