Macro Pulse - August 30, 2023

KEY MACRO HIGHLIGHTS:

German consumer morale to fall in September:

German consumer sentiment is expected to fall in September?to -25.5 heading into September from a slightly revised -24.6 in August, below expectations market expectation (Refinitiv: -24.3).

US job openings decline in July:?

US data released on Tuesday largely underwhelmed markets. Job openings fell to 8.827 mn in July, a more than two-year low and well below market estimates (Bloomberg: 9.5 mn),? from 9.165 mn in June.??Consumer confidence fell by more than forecast to 106.1 in August, lower than market expectation (Bloomberg:?116), from 114 in Jul.

Australian inflation slows: ?

Australia's inflation slowed to 4.9% YoY in July, a 17-month low and?under market forecasts of 5.2%,?down from 5.4% the previous month. The moderation was?driven by fall in holiday travel and declining fuel prices, a signal that interest rates might not need to rise again.?As a result, markets moved to price in a 99.5% probability that the Reserve Bank of Australia would pause its rate hikes for a third straight month in September, given inflation is easing as desired.

U.S. home prices rise month-over-month in June:

U.S. home prices rose on a monthly basis in June while annual prices were unchanged, adding to a growing body of evidence that housing costs have already begun to recover.?The S&P CoreLogic Case-Shiller national home price index, which covers all nine U.S. census divisions, increased month over month by 0.7% in June on a seasonally adjusted basis after rising by 0.8% in May. Another index tracking the 20 largest metro areas rose 0.9% on a monthly basis, topping estimates in a Reuters poll of economists for a 0.8% gain.

India allows exports of non-basmati white rice:

India has allowed traders to ship out their non-basmati white rice cargoes sitting at ports due to a sudden ban on exports of the category.?India, which accounts for 40% of world rice exports, sells the staple to more than 150 countries, including a few poor and vulnerable countries in Africa and Asia.

India cuts prices of cooking gas as inflation bites:

India cut the price of cooking gas for households on Tuesday by about 18% to rein in inflation.?The government reduced the price by 200 rupees ($2.42) on a 14.2-kilogram (33 pounds) cooking gas cylinder sold to 330 million households.

Key indicators/events to monitor:

Australia’s headline inflation is expected to drop further to 5.2% y/y in Aug from 5.4% in Jul, extending a moderation?in prices since last Dec where inflation peaked at 8.4%. Similar, Germany’s inflation will likely ease to 6.0% y/y in Aug from 6.2% in Jul. In the US, ADP employment will probably moderate to 195,000 in Aug from the blockbuster 324,000?print in Jul. The second print of US 2Q23 GDP is likely to stay unchanged from its preliminary read of 2.4% q/q SAAR.

Equities

Domestic Equity

Indian equity indices?ended marginally higher on Tuesday, driven by gains in metal stocks on expectations of demand recovery in top consumer China.?The Nifty 50 index settled 0.19% higher at 19,342.65, while the S&P BSE Sensex gained 0.12% to 65,075.82.?However, the more domestically-focussed small-caps and mid-caps were up 0.3% and 0.5%, respectively, continuing to outperform the blue-chip benchmarks.?The biggest gainers of the session were UPL, Hindalco Industries and Adani Ports and Special Economic Zone Ltd, while the biggest laggards included Bharti Airtel, Hindustan Unilever and Reliance Industries.

Global Equity

Global stocks ended higher. UK FTSE led gains to rise by 1.7%, followed by U.S. S&P 5OO (+1.5%) as iasweak US data prompted speculation that the Fed may be wrapping up its tightening cycle soon.?Asian equities staged a relief rally, led by Chinese equities on widespread expectations of yet another round of rate cut from Chinese banks.

Currencies

Barring JPY and CNY, other global currencies ended weaker with the DXY falling by 0.5% to settle at 103.5, undermined by weak US data. EUR/USD rose for a second day and added 0.6% to 1.0880. GBP/USD?gained 0.3% to 1.2644. USD/JPY touched a year-to-date high of 147.37 before reversing to close 0.5% lower at 145.88.?

Bonds

Global yields closed mixed. US 10Y yield fell by 8bps as weak macro data fueled expectations of a pause in the Fe's rate hiking cycle. Indian government bond yields ended largely flat on Tuesday as a lack of fresh triggers kept investors off big bets in a broadly cautious environment.?

Commodities

Brent crude price rose by 1.3% on Tuesday to settle at USD 85.5 pb, reversing losses from the previous session, as broad risk-on mood outweighed news of increased Russian seaborne crude flow. Gold prices and copper prices rose by 1.0% and 1.1% respectively, boosted by falling USD and US yields.

Source: PL Research, CEIC, CMIE Economic Outlook, Refinitiv, Bloomberg, Investing.com .