US inflation was much softer than expected overnight, which shunted down Treasury yields and the US dollar. Rates were held in Korea, but with a dovish turn, and there’s more signs of a softening New Zealand economy for the RBNZ to think about.
In our bonus deep dive interview, ANZ Economist Maddy Dunk looks at how the RBA views fiscal easings in state budgets because of cost-of-living measures.
5 things to know:
The US CPI fell unexpectedly by 0.1% in June, cementing bets the Fed will start cutting in September. US Treasury yields fell 8-13 bps and the US dollar index fell 0.5%. ANZ Economist in London Bansi Madhavani says the data will reassure the Fed.
Korea’s central bank held rates at 3.5% yesterday as expected, but its monetary policy statement was more dovish. ANZ Economist Krystal Tan says the easing cycle could start in October.
Malaysia’s central bank also held rates as expected at 3%. ANZ Economist Arindam Chakraborty says the BNM kept its robust growth outlook, but is not looking at hiking rates, either to slow inflation or bolster the ringgit.
ANZ NZ’s Truckometer measure of heavy vehicle movements fell 5.2% in June, after a drop in May. ANZ New Zealand Chief Economist Sharon Zollner says the data is a good real-time reflection of GDP.
Next week’s Q2 CPI reading will be important for the direction of New Zealand interest rates after Wednesday’s dovish pivot by the RBNZ. ANZ Economist Henry Russell says yesterday’s Selected Price Indices indicated the tide on inflation is turning, although mainly for tradable prices.
Cheers
Bernard
PS: Catch you next week with what to expect from China’s 3rd Plenum.
