Economic Weekly Wrap
08 July 2024 - 05 July 2024
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08 Jul 2024
US jobs report indicated a softening momentum in the labour market, bolstering the case for a rate cut in Sep’24. While non-farm payrolls increased more than expected by 206,000 in Jun’24 (est. 190,000), data for both Apr’24 and May’24 was revised sharply lower. Unemployment rate edged up to its highest since Oct’21 to 4.1% in Jun’24 from 4%. Growth in average hourly earnings slowed to 0.3% from 0.4% in May’24. Elsewhere in Japan, real wages declined for the 26th straight month by 1.4% in May’24. In Europe, focus remained on political developments. In UK, the new Prime Minister faces multiple challenges amid faltering growth in the country. In France, results of the second-round elections solidified expectations of a hung parliament. This week, focus remains on inflation reports from China, Germany, US and India, along with central bank meetings in New Zealand and South Korea.
Global indices ended mixed. Stocks in US were supported by softening labour market conditions raising hopes of a rate cut in Sep’24 (CME Fed watch probability at 72% vs 57.9% last week). Stocks in UK were lower, as investors kept a close eye on election results where Labour Party won a resounding majority. Asian stocks traded cautiously with Hang Seng losing the most. Sensex was a tad down. It is trading lower today in line with its Asian peers.
Fig 1 – Stock markets
04-07-2024 05-07-2024 Change, % Dow Jones 39,308 39,376 0.2 S & P 500 5,537 5,567 0.5 FTSE 8,241 8,204 (0.5) Nikkei 40,914 40,912 0 Hang Seng 18,028 17,800 (1.3) Shanghai Comp 2,958 2,950 (0.3) Sensex 80,050 79,997 (0.1) Nifty 24,302 24,324 0.1 Source: Bloomberg, Bank of Baroda Research
Global currencies ended higher against the dollar. DXY declined as recent data has led to expectations of a Sep’24 rate cut. GBP appreciated the most after a landslide victory for the Labour party in UK elections. INR closed broadly unchanged. It is trading stronger today, in line with other Asian currencies.
Fig 2 – Currencies
04-07-2024 05-07-2024 Change, % EUR/USD (1 EUR / USD) 1.0812 1.0840 0.3 GBP/USD (1 GBP / USD) 1.2760 1.2815 0.4 USD/JPY (JPY / 1 USD) 161.28 160.75 0.3 USD/INR (INR / 1 USD) 83.50 83.49 0 USD/CNY (CNY / 1 USD) 7.2682 7.2683 0 Source: Bloomberg, Bank of Baroda
Except China (higher), global yields closed lower. US 10Y yield fell the most supported by steep downward revisions in payroll numbers. Yields in Germany and UK also felt the impact of the same. Risk off sentiment surrounding evolving political landscape also led to increased demand for sovereign securities. India’s 10Y yield fell a tad, eyeing auction results. It is trading at the same level today.
Fig 3 – Bond 10Y Yield
04-07-2024 05-07-2024 Change, bps US 4.36 4.28 (8) UK 4.20 4.13 (7) Germany 2.61 2.56 (5) Japan 1.08 1.08 0 China 2.25 2.27 2 India 7.00 6.99 (1) Source: Bloomberg, Bank of Baroda Research
Fig 4 – Short Term Rates
04-07-2024 05-07-2024 Change in bps Tbill-91 days 6.74 6.71 (3) Tbill-182 days 6.84 6.89 5 Tbill-364 days 6.93 6.92 (1) G-Sec 2Y 6.95 6.95 (1) India OIS-2M 6.67 6.68 1 India OIS-9M 6.76 6.76 0 SONIA int rate benchmark 5.20 5.20 0 US SOFR 5.35 5.33 (2) Source: Bloomberg, Bank of Baroda Research
Fig 5 – Liquidity
04-07-2024 05-07-2024 Change (Rs tn) Net Liquidity (-Surplus/+Deficit) (1.3) (1.3) 0 Reverse Repo 0 0 0 Repo 0.7 0 (0.7) Source: RBI, Bank of Baroda Research
Fig 6 – Capital Market Flows
03-07-2024 04-07-2024 Change (US$ mn/Rs cr) FII (US$ mn) 550.4 891.5 341.1 Debt 83.7 231.4 147.7 Equity 466.7 660.1 193.4 Mutual Funds (Rs cr) 3,498.7 3,815.4 316.7 Debt 2,211.5 4,526.4 2,314.8 Equity 1,287.2 (711.0) (1,998.1) Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 2 Jul and 3 Jul 2024
Oil prices eased amidst reports of a ceasefire between Israel and Hamas.
Fig 7 – Commodities
04-07-2024 05-07-2024 % Change Brent Crude (US$/bbl) 87.4 86.5 (1.0) Gold (US$/Troy Ounce) 2,356.7 2,392.2 1.5 Copper (US$/MT) 9,734.1 9,795.2 0.6 Zinc (US$/MT) 2,928.9 2,943.9 0.5 Aluminium (US$/MT) 2,522.5 2,535.5 0.5 Source: Bloomberg, Bank of Baroda Research
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11 Jul 2024
Fed Chair reiterated that US inflation is on track to return to the Fed’s target range but shied away from committing to a widely expected rate cut in Sep’24. This comes on ahead of CPI data which is likely to show a further moderation to 3.1% in Jun’24 from 3.3% in Jul’24 (YoY). Traders are now pricing in two possible rate cuts by the Fed in 2024, with the first expected in Sep’24 (70% probability as per CME FedWatch Tool) and another in Dec’24 (probability at 46%). Separately, Bank of England’s Chief Economist flagged the continued stubbornness in inflation and increase in wage growth as risks to policy easing. As a result, investors have pared back expectations of a rate cut by the BoE in Aug’24. In Japan, core machinery orders declined by 3.2% (est. 0.9% drop), following a decline of 2.9% in Apr’24. The data complicates BoJ’s decision to raise rates amid faltering growth and increasing price pressures.
Global indices ended mixed. Investors remained cautious monitoring comments of key central bank officials. Stocks in China fell the most amid worries over persisting pressure in pricing power. In US, stocks rose led by hopes that the Fed will start its easing cycle in Sep’24. Sensex fell by 0.5%, led by metal and auto stocks. It is trading higher today, while Asian stocks are trading mixed.
Fig 1 – Stock Markets
09-07-2024 10-07-2024 Change, % Dow Jones 39,292 39,721 1.1 S & P 500 5,577 5,634 1.0 FTSE 8,140 8,194 0.7 Nikkei 41,580 41,832 0.6 Hang Seng 17,523 17,472 (0.3) Shanghai Comp 2,959 2,939 (0.7) Sensex 80,352 79,925 (0.5) Nifty 24,433 24,324 (0.4) Source: Bloomberg, Bank of Baroda Research
Global currencies ended mixed. DXY declined by 0.1% as investors have raised bets of two rate cuts by Fed this year. GBP rose by 0.5% tracking comments from a key BoE official. JPY depreciated further to its weakest since Dec’86. INR fell a tad. However, it is trading stronger today, in line with other Asian peers.
Fig 2 – Currencies
09-07-2024 10-07-2024 Change, % EUR/USD (1 EUR / USD) 1.0813 1.0830 0.2 GBP/USD (1 GBP / USD) 1.2786 1.2849 0.5 USD/JPY (JPY / 1 USD) 161.33 161.69 (0.2) USD/INR (INR / 1 USD) 83.49 83.53 0 USD/CNY (CNY / 1 USD) 7.2726 7.2760 0 Source: Bloomberg, Bank of Baroda
Global yields closed lower. In Germany, 10Y yield fell the most by 5bps led by political uncertainty in France. In UK, 10Y yield fell by 3bps even as BoE member flagged risks of underlying inflation. US 10Y yield fell a tad following comments of Fed official who spoke of US data reaffirming soft landing. India’s 10Y yield inched down marginally and is trading flat today.
Fig 3 – Bond 10Y Yield
09-07-2024 10-07-2024 Change, bps US 4.30 4.28 (1) UK 4.16 4.13 (3) Germany 2.58 2.53 (5) Japan 1.09 1.09 (1) China 2.28 2.27 (1) India 6.99 6.98 (1) Source: Bloomberg, Bank of Baroda Research
Fig 4 – Short Term Rates
09-07-2024 10-07-2024 Change, bps Tbill-91 days 6.73 6.74 1 Tbill-182 days 6.82 6.87 5 Tbill-364 days 6.90 6.91 1 G-Sec 2Y 6.93 6.92 (1) India OIS-2M 6.68 6.67 (1) India OIS-9M 6.75 6.73 (2) SONIA int rate benchmark 5.20 5.20 0 US SOFR 5.32 5.34 2 Source: Bloomberg, Bank of Baroda Research
Fig 5 – Liquidity
Rs tn 09-07-2024 10-07-2024 Change (Rs tn) Net Liquidity (-Surplus/+Deficit) (1.0) (1.1) (0.1) Reverse Repo 0.2 0.4 0.2 Repo 0 0 0 Source: RBI, Bank of Baroda Research
Fig 6 – Capital Market Flows
08-07-2024 09-07-2024 Change (US$ mn/Rs cr) FII (US$ mn) (9.3) 251.2 260.5 Debt (28.7) 68.1 96.8 Equity 19.4 183.1 163.7 Mutual Funds (Rs cr) (1,143.4) (1,611.4) (468.0) Debt 157.0 (1,886.3) (2,043.3) Equity (1,300.4) 274.9 1,575.3 Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 4 Jul and 5 Jul 2024
Oil prices rose as OPEC upgraded its global growth forecast.
Fig 7 – Commodities
09-07-2024 10-07-2024 % Change Brent Crude (US$/bbl) 84.7 85.1 0.5 Gold (US$/ Troy Ounce) 2,364.1 2,371.3 0.3 Copper (US$/ MT) 9,711.0 9,743.6 0.3 Zinc (US$/MT) 2,868.2 2,904.4 1.3 Aluminium (US$/MT) 2,496.5 2,483.5 (0.5) -
12 Jul 2024
US CPI report cemented the case for a Fed rate cut in Sep’24. On a MoM basis, CPI inflation in the US declined by 0.1% (est. +0.1%), marking its first drop since May’20. Core CPI also eased to 0.1% from 0.2% in May’24. The drop in inflation was welcomed by a voting member of the FOMC who termed it “excellent”. Jobless claims declined more than expected due to seasonal factors. In Germany, CPI inflation in Jun’24 was confirmed at 2.2%, moderating from 2.4%. UK’s GDP posted a solid 0.4% growth in May’24 (0% in Apr’24), providing a significant boost to the new government. Separately, China’s exports increased by 8.6% in Jun’24 (est. 8%). However, domestic demand remained subdued as reflected in the unexpected decline in imports (-2.3% vs. est. +2.8%). In India, CPI inflation is likely to inch up to 4.9% in Jun’24 from 4.75%, as food prices remain elevated. IIP growth is expected to improve to 6% from 5% in Apr’24 (BoB estimate).
Except S&P 500 and Indian stocks, global indices ended higher. Investor sentiments were bolstered by encouraging CPI print in the US which strengthened case for rate cut. Hang Seng has risen the most followed by Shanghai Comp. Moderation of S&P 500 was led by technology stocks. Sensex closed flat. It is trading higher today, while Asian stocks are trading mixed.
Fig 1 – Stock Markets
10-07-2024 11-07-2024 Change, % Dow Jones 39,721 39,754 0.1 S & P 500 5,634 5,585 (0.9) FTSE 8,194 8,223 0.4 Nikkei 41,832 42,224 0.9 Hang Seng 17,472 17,832 2.1 Shanghai Comp 2,939 2,970 1.1 Sensex 79,925 79,897 0 Nifty 24,324 24,316 0 Source: Bloomberg, Bank of Baroda Research
Fig 2 – Currencies
10-07-2024 11-07-2024 Change, % EUR/USD (1 EUR / USD) 1.0830 1.0868 0.4 GBP/USD (1 GBP / USD) 1.2849 1.2915 0.5 USD/JPY (JPY / 1 USD) 161.69 158.84 1.8 USD/INR (INR / 1 USD) 83.53 83.57 0 USD/CNY (CNY / 1 USD) 7.2760 7.2579 0.2 Source: Bloomberg, Bank of Baroda
Fig 3 – Bond 10Y Yield
10-07-2024 11-07-2024 Change, bps US 4.28 4.21 (7) UK 4.13 4.07 (5) Germany 2.53 2.46 (7) Japan 1.09 1.09 1 China 2.27 2.26 (1) India 6.98 6.98 1 Source: Bloomberg, Bank of Baroda Research
Fig 4 – Short Term Rates
10-07-2024 11-07-2024 Change in bps Tbill-91 days 6.74 6.73 (1) Tbill-182 days 6.87 6.85 (2) Tbill-364 days 6.91 6.90 (1) G-Sec 2Y 6.92 6.93 1 India OIS-2M 6.67 6.67 0 India OIS-9M 6.73 6.73 0 SONIA int rate benchmark 5.20 5.20 0 US SOFR 5.34 5.34 0 Source: Bloomberg, Bank of Baroda Research
Fig 5 – Liquidity
10-07-2024 11-07-2024 Change (Rs tn) Net Liquidity (-Surplus/+Deficit) (1.1) (1.3) (0.2) Reverse Repo 0.4 0.5 0.1 Repo 0 0 0 Source: RBI, Bank of Baroda Research
Fig 6 – Capital Market Flows
09-07-2024 10-07-2024 Change (US$ mn/Rs cr) FII (US$ mn) 251.2 339.3 88.2 Debt 68.1 77.7 9.6 Equity 183.1 261.6 78.5 Mutual Funds (Rs cr) 1,331.8 1,273.3 (58.6) Debt 689.5 293.0 (396.6) Equity 642.3 980.3 338.0 Source: Bloomberg, Bank of Baroda Research | Note: Mutual Fund data as of 8 Jul and 9 Jul 2024
Oil prices edged up amidst falling US inventories.
Fig 7 – Commodities
10-07-2024 11-07-2024 % Change Brent crude (US$/bbl) 85.1 85.4 0.4 Gold (US$/ Troy Ounce) 2,371.3 2,415.5 1.9 Copper (US$/ MT) 9,743.6 9,628.0 (1.2) Zinc (US$/MT) 2,904.4 2,899.5 (0.2) Aluminium (US$/MT) 2,483.5 2,476.5 (0.3) Source: Bloomberg, Bank of Baroda Research
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डिस्क्लेमर
इस लेख/इन्फोग्राफिक/चित्र/वीडियो की सामग्री का उद्देश्य केवल सूचना से है और जरूरी नहीं कि यह बैंक ऑफ बड़ौदा के विचारों को प्रतिबिंबित करे। सामग्री प्रकृति में सामान्य हैं और यह केवल सूचना मात्र है। यह आपकी विशेष परिस्थितियों में विशिष्ट सलाह का विकल्प नहीं होगा । बैंक ऑफ बड़ौदा और/या इसके सहयोगी और इसकी सहायक कंपनियां सटीकता के संबंध में कोई प्रतिनिधित्व नहीं करती हैं; यहां निहित या अन्यथा प्रदान की गई किसी भी जानकारी की पूर्णता या विश्वसनीयता और इसके द्वारा उसी के संबंध में किसी भी दायित्व को अस्वीकार करें। जानकारी अद्यतन, पूर्णता, संशोधन, सत्यापन और संशोधन के अधीन है और यह भौतिक रूप से बदल सकती है। इसकी सूचना किसी भी क्षेत्राधिकार में किसी भी व्यक्ति द्वारा वितरण या उपयोग के लिए अभिप्रेत नहीं है, जहां ऐसा वितरण या उपयोग कानून या विनियमन के विपरीत होगा या बैंक ऑफ बड़ौदा या उसके सहयोगियों को किसी भी लाइसेंसिंग या पंजीकरण आवश्यकताओं के अधीन करेगा । उल्लिखित सामग्री और सूचना के आधार पर किसी भी वित्तीय निर्णय लेने के लिए पाठक द्वारा किए गए किसी भी प्रत्यक्ष/अप्रत्यक्ष नुकसान या देयता के लिए बैंक ऑफ बड़ौदा जिम्मेदार नहीं होगा । कोई भी वित्तीय निर्णय लेने से पहले अपने वित्तीय सलाहकार से सलाह जरूर लें।