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Economic Weekly Wrap
12 August 2024 - 16 August 2024

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  • 12 Aug 2024

    Supported by cooling inflation and signs of weakness in the labour market (continuing claims highest since Nov’21), investors are growing more confident that the Fed may announce a jumbo 50bps rate cut in its Sep’24 meeting. Fed Governor Bowman also softened her hawkish stance and acknowledged that monetary policy should not be too restrictive. Separately, demand conditions in China seem to be improving with CPI inflation inching back up, which also supported rise in international oil prices. In contrast, stagflation worries in Germany are seen emerging with Jul’24 CPI rising to 2.3% from 2.2% in Jun’24. On MoM basis also CPI was up by 0.3%, led by higher food prices. Energy prices are easing, however core CPI still remains close to 3% mark (2.9% in Jul’24). This comes at a time when manufacturing activity is declining and services sector activity is also slowing down.


    Barring Shanghai Comp, other global indices ended higher. US indices advanced, reviewing macro data release and optimism around the Fed beginning with the monetary easing cycle in the coming months. Nikkei was the biggest gainer amongst other indices, amidst dovish signals by BoJ. Sensex surged, led by gains in real estate and IT stocks. However, it is trading lower today, while other Asian stocks are trading higher.

    Fig 1 – Stock Markets

      08-08-2024 09-08-2024 Change, %
    Dow Jones 39,446 39,498 0.1
    S & P 500 5,319 5,344 0.5
    FTSE 8,145 8,168 0.3
    Nikkei 34,831 35,025 0.6
    Hang Seng 16,892 17,090 1.2
    Shanghai Comp 2,870 2,862 (0.3)
    Sensex 78,886 79,706 1.0
    Nifty 24,117 24,368 1.0

    Source: Bloomberg, Bank of Baroda Research

    Except for the EUR and INR (flat), other global currencies ended higher. DXY slipped ahead of the key data releases (PPI and CPI). Fed chair comments scheduled later this week will also be closely monitored. JPY strengthened by 0.4%. INR is trading flat today, while other Asian currencies are trading mixed.

    Fig 2 – Currencies

      08-08-2024 09-08-2024 Change, %
    EUR/USD (1 EUR / USD) 1.0919 1.0917 0
    GBP/USD (1 GBP / USD) 1.2748 1.2761 0.1
    USD/JPY (JPY / 1 USD) 147.23 146.61 0.4
    USD/INR (INR / 1 USD) 83.96 83.96 0.0
    USD/CNY (CNY / 1 USD) 7.1763 7.1683 0.1

    Source: Bloomberg, Bank of Baroda


    Global yields closed mixed. 10Y yields in US and Europe fell, while it inched up in China. US 10Y yield declined the most as central bank officials commented that inflation is cooling down, thus fuelling hopes of 50bps cut by Fed in Sep’24. China’s 10Y yield rose by 3bps as inflation rose faster than expected. India’s 10Y yield ended flat, but is trading lower today at 6.87%, following global cues.

    Fig 3 – Bond 10Y Yield

      08-08-2024 09-08-2024 Change, bps
    US 3.99 3.94 (5)
    UK 3.98 3.95 (3)
    Germany 2.27 2.23 (4)
    Japan 0.85 0.85 0
    China 2.17 2.21 3
    India 6.88 6.88 0

    Source: Bloomberg, Bank of Baroda Research

    Fig 4 – Short Term Rates

      08-08-2024 09-08-2024 Change in bps
    Tbill-91 days 6.62 6.58 (4)
    Tbill-182 days 6.71 6.72 1
    Tbill-364 days 6.73 6.73 0
    G-Sec 2Y 6.74 6.75 1
    India OIS-2M 6.57 6.58 1
    India OIS-9M 6.54 6.55 1
    SONIA int rate benchmark 4.95 4.95 0
    US SOFR 5.33 5.34 1

    Source: Bloomberg, Bank of Baroda Research

    Fig 5 – Liquidity

      08-08-2024 09-08-2024 Change (Rs tn)
    Net Liquidity (-Surplus/+Deficit) (1.7) (1.5) 0.2
    Reverse Repo 1.6 0 (1.6)
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research

    Fig 6 – Capital Market Flows

      07-08-2024 08-08-2024 Change (US$ mn/Rs cr)
    FII (US$ mn) (102.7) 108.5 211.2
    Debt 235.8 46.4 (189.4)
    Equity (338.5) 62.1 400.6
    Mutual Funds (Rs cr) 985.0 (3,444.0) (4,429.0)
    Debt (2,872.4) (2,137.6) 734.9
    Equity 3,857.4 (1,306.4) (5,163.8)

    Source: Bloomberg, Bank of Baroda Research

    Oil prices inch up, driven by escalating geo-political tensions in the Middle East.

    Fig 7 – Commodities

      08-08-2024 09-08-2024 % Change
    Brent Crude (US$/bbl) 79.2 79.7 0.6
    Gold (US$/Troy Ounce) 2,427.5 2,431.3 0.2
    Copper (US$/MT) 8,670.9 8,747.3 0.9
    Zinc (US$/MT) 2,601.3 2,698.5 3.7
    Aluminium (US$/MT) 2,274.0 2,301.5 1.2

    Source: Bloomberg, Bank of Baroda Research

  • 13 Aug 2024

    In Japan, PPI inflation rose by 3% in Jul’24, following 2.9% rise in Jun’24. Major pressure continues to come from higher Yen denominated cost of imported materials (10.8% versus 10.6%), owing to weakness in Yen. This weakness may continue as BoJ Deputy Governor has signalled that there might not be more rate hikes in the near future. Separately, in the US, investors await the release of CPI inflation data (due later this week) to gauge the quantum of Fed rate cuts this year. Inflation is expected to come in unchanged at 3% in Jul’24. For the time being there remains a 50-50 chance of 50bps rate cut in Sep’24 (as CME FedWatch tool). On the domestic front, CPI inflation in Jul’24 eased to nearly 5-year low of 3.5% (supported by favourable base) from 5.1% in Jun’24, while industrial production growth slowed to 4.2% in Jun’24 from 6.2% in May’24.


    Global indices ended mixed. Investors will turn their focus towards upcoming data print (US CPI). According to CME, investors expect 100bps cut by the end of CY24. Sensex ended in red led by power stocks. With India’s weight increasing in the MSCI global standard index, it is likely to attract potential inflows. Sensex is trading lower today, while Asian stocks are trading mixed.

    Fig 1 – Stock Markets

      09-08-2024 12-08-2024 Change, %
    Dow Jones 39,498 39,357 (0.4)
    S & P 500 5,344 5,344 0
    FTSE 8,168 8,210 0.5
    Nikkei 34,831 35,025 0.6
    Hang Seng 17,090 17,112 0.1
    Shanghai Comp 2,862 2,858 (0.1)
    Sensex 79,706 79,649 (0.1)
    Nifty 24,368 24,347 (0.1)

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in Japan were closed on 12 Aug 2024

    Except for the CNY (lower) and INR (flat), other global currencies ended higher. DXY remained range-bound awaiting key releases that will help gauge Fed’s rate outlook. Hotter-than-expected data print will push for a 25bps cut in Sep’24 or a 50bps cut if data turns out to be cooler, raising slowdown concerns. INR is trading stronger today, while other Asian currencies are trading mixed.

    Fig 2 – Currencies

      09-08-2024 12-08-2024 Change, %
    EUR/USD (1 EUR / USD) 1.0917 1.0931 0.1
    GBP/USD (1 GBP / USD) 1.2761 1.2770 0.1
    USD/JPY (JPY / 1 USD) 147.23 146.61 0.4
    USD/INR (INR / 1 USD) 83.96 83.97 0
    USD/CNY (CNY / 1 USD) 7.1683 7.1747 (0.1)

    Source: Bloomberg, Bank of Baroda | Note: Markets in Japan were closed on 12 Aug 2024


    Global yields closed mixed. 10Y yields in US and UK fell, while it inched further up in China. US 10Y yield was down by 4bps, anticipating support from inflation data due to be released later this week. China’s 10Y yield rose by 4bps. As per news reports, this is due to central bank’s intervention. India’s 10Y yield ended flat, but is trading slightly lower today at 6.87%, despite increase in oil prices.

    Fig 3 – Bond 10Y Yield

      09-08-2024 12-08-2024 Change, bps
    US 3.94 3.90 (4)
    UK 3.95 3.92 (3)
    Germany 2.23 2.23 0
    Japan 0.85 0.85 0
    China 2.21 2.25 4
    India 6.88 6.88 0

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in Japan were closed on 12 Aug 2024

    Fig 4 – Short Term Rates

      09-08-2024 12-08-2024 Change in bps
    Tbill-91 days 6.58 6.61 3
    Tbill-182 days 6.72 6.70 (2)
    Tbill-364 days 6.73 6.73 0
    G-Sec 2Y 6.75 6.76 1
    India OIS-2M 6.58 6.58 0
    India OIS-9M 6.55 6.58 3
    SONIA int rate benchmark 4.95 4.95 0
    US SOFR 5.34 5.34 0

    Source: Bloomberg, Bank of Baroda Research

    Fig 5 – Liquidity

      09-08-2024 12-08-2024 Change (Rs tn)
    Net Liquidity (-Surplus/+deficit) (1.5) (1.1) 0.4
    Reverse Repo 0 0.1 0.1
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research

    Fig 6 – Capital Market Flows

      08-08-2024 09-08-2024 Change (US$ mn/Rs cr)
    FII (US$ mn) 108.5 (34.2) (142.8)
    Debt 46.4 104.2 57.8
    Equity 62.1 (138.4) (200.6)
    Mutual funds (Rs cr) 985.0 (3,444.0) (4,429.0)
    Debt (2,872.4) (2,137.6) 734.9
    Equity 3,857.4 (1,306.4) (5,163.8)

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 7 and 8 Aug 2024

    Oil prices rose sharply, in view of continuously escalated geo-political tensions.

    Fig 7 – Commodities

      09-08-2024 12-08-2024 % change
    Brent crude (US$/bbl) 79.7 82.3 3.3
    Gold (US$/ Troy Ounce) 2,431.3 2,472.9 1.7
    Copper (US$/MT) 8,747.3 8,908.2 1.8
    Zinc (US$/MT) 2,698.5 2,694.6 (0.1)
    Aluminium (US$/MT) 2,301.5 2,305.5 0.2

    Source: Bloomberg, Bank of Baroda Research

  • 14 Aug 2024

    PPI inflation in the US eased to 0.1% (est.: 0.2%) in Jul’24 from 0.2% in Jun’24. On YoY basis also, it moderated sharply in Jul’24 (2.2%) compared with Jun’24 (2.7%). On sequential basis, the surprise decline was on account of inflation in trade (-1.3% versus 1.4%). On the other hand, food and energy inflation rose. Investors now await the release CPI inflation print. In the UK also, some relief was noted as wage growth slowed to 5.4% in Q2CY24 (in line with expectations) from 5.7% between Apr and May’24. This may help make case for another rate cut by BoE. Separately, Central Bank of New Zealand (RBNZ) surprised the markets by lowering its benchmark rate by 25bps to 5.25%—first cut since Mar’20. It further lowered its policy rate forecast to 4.92% for this year, implying more rate cuts can be expected in the upcoming meetings. The decision was driven by “surveyed inflation expectations…moving consistent with low and stable inflation”.


    Barring the domestic market, other global indices ended higher. US indices advanced after softer PPI print (2.2% from 2.7% in Jun’24) raised hopes of rate cut in Sep’24. Upcoming CPI print will offer more guidance on the same. Sensex continued to dip and was dragged down by sharp losses in banking and metal stocks. Sensex is trading higher today, while Asian stocks are trading mixed.

    Fig 1 – Stock Markets

      12-08-2024 13-08-2024 Change, %
    Dow Jones 39,357 39,766 1.0
    S & P 500 5,344 5,434 1.7
    FTSE 8,210 8,235 0.3
    Nikkei 35,025 36,233 3.4
    Hang Seng 17,112 17,174 0.4
    Shanghai Comp 2,858 2,868 0.3
    Sensex 79,649 78,956 (0.9)
    Nifty 24,347 24,139 (0.9)

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in Japan were closed on 12 Aug 2024

    Fig 2 – Currencies

      12-08-2024 13-08-2024 Change, %
    EUR/USD (1 EUR / USD) 1.0931 1.0993 0.6
    GBP/USD (1 GBP / USD) 1.2770 1.2862 0.7
    USD/JPY (JPY / 1 USD) 146.61 146.84 (0.2)
    USD/INR (INR / 1 USD) 83.97 83.97 0
    USD/CNY (CNY / 1 USD) 7.1747 7.1550 0.3

    Source: Bloomberg, Bank of Baroda


    Barring India, other global yields declined. US 10Y yield fell the most, driven by softer than expected PPI print. Investors are also hoping for a mild CPI report. Lower than expected wage growth in UK also pushed UK 10Y yield lower. India’s 10Y yield ended flat, despite noting drop in oil prices. However, following global cues, it is trading slightly lower today at 6.87%.

    Fig 3 – Bond 10Y Yield

      12-08-2024 13-08-2024 Change, bps
    US 3.90 3.84 (6)
    UK 3.92 3.89 (3)
    Germany 2.23 2.19 (4)
    Japan 0.85 0.85 (1)
    China 2.25 2.22 (3)
    India 6.88 6.88 0

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in Japan were closed on 12 Aug 2024

    Fig 4 – Short Term Rates

      12-08-2024 13-08-2024 Change in bps
    Tbill-91 days 6.61 6.61 0
    Tbill-182 days 6.70 6.68 (2)
    Tbill-364 days 6.73 6.72 (1)
    G-Sec 2Y 6.76 6.77 1
    India OIS-2M 6.58 6.58 0
    India OIS-9M 6.58 6.56 (2)
    SONIA int rate benchmark 4.95 4.95 0
    US SOFR 5.34 5.34 0

    Source: Bloomberg, Bank of Baroda Research

    Fig 5 – Liquidity

      12-08-2024 13-08-2024 Change (Rs tn)
    Net Liquidity (-Surplus/+Deficit) (1.1) (1.3) (0.2)
    Reverse Repo 0.1 0.6 0.5
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research

    Fig 6 – Capital Market Flows

      09-08-2024 12-08-2024 Change (US$ mn/Rs cr)
    FII (US$ mn) (34.2) (227.0) (192.8)
    Debt 104.2 107.8 3.6
    Equity (138.4) (334.8) (196.4)
    Mutual Funds (Rs cr) (3,444.0) 131.0 3,574.9
    Debt (2,137.6) (2,572.6) (435.0)
    Equity (1,306.4) 2,703.5 4,009.9

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 8 and 9 Aug 2024


    Oil prices fell, as OPEC lowered its demand forecasts for CY24 (led by China).

    Fig 7 – Commodities

      12-08-2024 13-08-2024 % change
    Brent Crude (US$/bbl) 82.3 80.7 (2.0)
    Gold (US$/ Troy Ounce) 2,472.9 2,465.2 (0.3)
    Copper (US$/ MT) 8,908.2 8,847.4 (0.7)
    Zinc (US$/MT) 2,694.6 2,637.2 (2.1)
    Aluminium (US$/MT) 2,305.5 2,332.0 1.1

    Source: Bloomberg, Bank of Baroda Research


  • 16 Aug 2024

    Signalling strength in the US economy, advance retail sales accelerated to 1% much higher than expected in Jul’24 after declining by 0.2% in Jun’24. This was supported by higher sales across the following categories, motor vehicles (3.6%), electronics (1.6%) and food outlets (0.9%). Additionally, lower jobless claims data signalled resilience in the job market. These data sets came post the softer PPI print which has soothed slowdown concerns and propelled expectation of rate cut in upcoming Fed meet. As a result, global equity markets advanced and also noted a spike in treasury yields. Separately, UK economy expanded at a slower pace of 0.6% (in line with expectation) in Q2CY24 from 0.7% in Q1CY24. On monthly basis, the economy registered 0% growth in Jun’24 from 0.4% in May’24.


    Most of the global indices largely ended higher. US indices rallied after better than expected macro data (softer PPI, surge in retail sales and lower jobless claims) allayed fears of slowdown. Nikkei continued to make solid gains and is expected to clock best week in over 4-years. Led by strong momentum globally, Sensex is trading higher today, in line with other Asian stocks.

    Fig 1 – Stock Markets

      14-08-2024 15-08-2024 Change, %
    Dow Jones 40,008 40,563 1.4
    S & P 500 5,455 5,543 1.6
    FTSE 8,281 8,347 0.8
    Nikkei 36,442 36,727 0.8
    Hang Seng 17,113 17,109 0
    Shanghai Comp 2,851 2,877 0.9
    Sensex 78,956 79,106 0.2
    Nifty 24,139 24,144 0

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 15 Aug 2024


    Global currencies ended mixed. DXY rose by 0.4% as US retail sales increased more than expected allaying fears of an imminent recession. JPY and EUR depreciated. GBP gained as UK’s GDP rose in line with expectations in Q2 CY24. INR is trading stronger today, in line with other Asian currencies.

    Fig 2 – Currencies

      14-08-2024 15-08-2024 Change, %
    EUR/USD (1 EUR / USD) 1.1012 1.0972 (0.4)
    GBP/USD (1 GBP / USD) 1.2829 1.2855 0.2
    USD/JPY (JPY / 1 USD) 147.33 149.28 (1.3)
    USD/INR (INR / 1 USD) 83.97 83.95 0
    USD/CNY (CNY / 1 USD) 7.1411 7.1747 (0.5)

    Source: Bloomberg, Bank of Baroda | Note: Markets in India were closed on 15 Aug 2024


    Except India, other global yields edged up. US 10Y yield rose by 8bps as strong retail sales and decline in jobless claims have strengthened the case for a smaller rate cut in Sep’24. UK’s 10Y yield also rose sharply as data showed 2 consecutive quarters of strong growth. India’s 10Y yield eased by 2bps, but is trading higher at 6.88% today ahead of weekly auction.

    Fig 3 – Bond 10Y Yield

      14-08-2024 15-08-2024 Change, bps
    US 3.84 3.91 8
    UK 3.83 3.92 10
    Germany 2.18 2.26 8
    Japan 0.82 0.84 2
    China 2.19 2.20 1
    India 6.88 6.86 (2)

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 15 Aug 2024


    Fig 4 – Short Term Rates

      13-08-2024 14-08-2024 Change in bps
    Tbill-91 days 6.61 6.60 (1)
    Tbill-182 days 6.68 6.72 4
    Tbill-364 days 6.72 6.72 0
    G-Sec 2Y 6.77 6.75 (1)
    India OIS-2M 6.58 6.58 0
    India OIS-9M 6.56 6.53 (3)
    SONIA int rate benchmark 4.95 4.95 0
    US SOFR 5.34 5.33 (1)

    Source: Bloomberg, Bank of Baroda Research | Note: Markets in India were closed on 15 Aug 2024


    Fig 5 – Liquidity

      13-08-2024 14-08-2024 Change (Rs tn)
    Net Liquidity (-Surplus/+deficit) (1.3) (1.4) (0.1)
    Reverse Repo 0.6 0.7 0.1
    Repo 0 0 0

    Source: RBI, Bank of Baroda Research


    Fig 6 – Capital Market Flows

      12-08-2024 13-08-2024 Change (US$ mn/Rs cr)
    FII (US$ mn) (227.0) (99.6) 127.4
    Debt 107.8 69.5 (38.3)
    Equity (334.8) (169.1) 165.7
    Mutual funds (Rs cr) 131.0 595.3 464.4
    Debt (2,572.6) (3,387.4) (814.8)
    Equity 2,703.5 3,982.7 1,279.2

    Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 9 and 12 Aug 2024


    Fig 7 – Commodities

      14-08-2024 15-08-2024 % Change
    Brent crude (US$/bbl) 79.8 81.0 1.6
    Gold (US$/ Troy Ounce) 2,447.9 2,456.8 0.4
    Copper (US$/ MT) 8,863.8 9,050.9 2.1
    Zinc (US$/MT) 2,662.5 2,731.3 2.6
    Aluminium (US$/MT) 2,335.5 2,363.5 1.2

    Source: Bloomberg, Bank of Baroda Research

Economics Scenario

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Important disclosures are provided at the end of this report.

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