Macro Pulse - September 21, 2023
Prabhudas Lilladher Private Limited
We are one of India's leading research based financial services organisation.
KEY MACRO HIGHLIGHTS:
US manufacturing production rises in August: ?
U.S. Manufacturing output factories edged up 0.1% in August from 0.4% in July. There were increases in the output of primary metals, machinery, aerospace and miscellaneous transportation equipment as well as furniture and related products. But production of wood products declined as did that of nonmetallic mineral products, fabricated metal products, and electrical equipment, appliances and components.
US housing starts hit 3-year low:
U.S. homebuilding tumbled 11.3% to a seasonally adjusted annual rate of 1.283 million units last month, the lowest level since June 2020, as a resurgence in mortgage rates weighed on demand for housing.
U.S. consumer sentiment slips again:
U.S. University of Michigan's Consumer Sentiment Index preliminary reading dropped to 67.7 this month consumer sentiment, edging lower for a second straight month, from a final reading of 69.5 in August. That was below the median forecast of 69.1 among economists polled by Reuters.
Euro zone August inflation revised down:?
Euro zone consumer inflation in August was 0.5% MoM in August and 5.2% YoY, lower than the flash estimate of 5.3% YoY reported 1initially. Eurostat said more expensive services had the biggest impact on the annualised reading in August, adding 2.41 percentage points to the final number. Food, alcohol and tobacco added another 1.98 percentage points and industrial goods 1.19 points. A fall in the prices of energy subtracted 0.34 points.
Easing UK inflation raises prospect of BoE rate hike pause:
Britain's consumer price index dropped to 6.7% in August, its lowest since February 2022, from July's 6.8%, prompting investors to raise bets on the Bank of England pausing its long run of interest rates hikes as soon as Thursday. Core inflation - which strips out volatile food and energy prices - fell to 6.2% from 6.9% in July.
India-Canada dispute throws cold water on trade agreement:?
Trade talks between India and Canada have taken a hit as tension rises after Canadian Prime Minister Justin Trudeau said authorities were investigating "credible allegations" linking New Delhi's agents to the murder of Sikh separatist leader, Hardeep Singh Nijjar. Canada and India have been trying to boost low levels of bilateral trade, which in 2022 amounted to just C$13.7 billion ($10.2 billion) out of Canada's total of C$1.52 trillion. Both sides have announced they are freezing the talks.
India's net direct tax collection rises: ?
The Indian government's net direct tax collections rose 23.5% YoY to 8.65 trillion rupees ($103.9 billion) in April-Sept. 16. The tax collection includes corporate tax of 4.16 trillion rupees and personal income tax of 4.47 trillion rupees.
RBI says stabilising core inflation shows easing price pressures:??
The Reserve Bank of India sees moderating core inflation, which excludes food and fuel prices, as a sign of easing price pressures in the economy. "The correction is not complete, and more is expected to drive down retail inflation in its September reading," the central bank said. It added the correction in prices has moved beyond the three key vegetables - tomato, potato and onion - and the outlook for cereal prices has brightened, "supported by active supply side interventions".
Key indicators/ Events to monitor:
Investors await the policy decision of the world's largest central bank, due later today, in which it is expected to stand pat on rates, while inflation data (CPI, RPI and PPI) for Aug will be the focus of the UK.
领英推荐
Equities
Domestic Equity
Indian equity indices?indexes eased from record highs on Monday, with the Sensex ending a 11-session winning streak, as investors remained cautious ahead of the U.S. Federal Reserve's interest rate decision. The benchmark Nifty 50?fell 0.3% to 20,133.3, while the S&P BSE Sensex?slipped 0.4% to 67,596.8. Sectorally, heavyweight information technology stocks?led losses on the benchmark, slipping 0.7%, while metals dropped 1.1%. Mid-cap?and small-cap stocks, which had turned volatile recently amid concerns over valuations, shed 0.4% and 0.5% respectively. India’s equity market was closed on Tuesday on account of a public holiday.
Global Equity
Global indices ended lower on Tuesday as market participants looked ahead to the U.S. Federal Reserve's expected decision to leave key interest rates unchanged on Wednesday. Japan’s Nikkei led losses to decline by 0.9%, followed by Germany’s DAX 30.
Currencies
Global currencies closed lower with the DXY edging lower by 0.1% on Wednesday ahead of a much-anticipated rate decision by the Federal Reserve later in the day, while sterling slid to its lowest since late May by 0.1% on increased bets the Bank of England will pause its historic run of interest rate hikes. India’s currency market was closed on Tuesday on account of a public holiday
Bonds
Global yields closed mixed. US 10Y yield rose by 5bps as a hawkish pause is expected in the upcoming policy by Fed. UK’s 10Y yield fell by 5bps awaiting CPI data. Japan and China’s 10Y yield closed stable. India’s bond market was closed on Tuesday on account of a public holiday.
Commodities
Brent crude moderated 0.1% due to worries about weaker economic growth and rising U.S. crude inventories. Gold price remained unchanged, while copper prices fell by 0.8%.
Source: PL Research, CEIC, CMIE Economic Outlook, Refinitiv, Bloomberg, Investing.com.