US treasury yields drop sharply on more confidence the Fed can cut three times this year. The Bank of England cuts, but only just. China’s factory output contracts in July, and Australian exports to China fall. All eyes are now on US non-farm payrolls.
In our bonus deep dive interview we return to our coverage of China’s weakening consumer confidence, with ANZ Agriculture Economist Susan Kilsby explaining why authorities’ attempts to revive consumer demand are struggling to get traction.
5 things to know:
US Treasury yields sank five to eight basis points to their lowest levels since February after weak US ISM data. The Bank of England cut 25 bps to 5.0%. economic data. ANZ Economist Bansi Madhavani says markets are now more confident the Fed will cut three times this year.
Australia’s trade surplus rose by $537 million in June to $5.59 billion, as exports led by rural goods rose by more than imports. Export prices fell nearly 6%, mainly due to softer Chinese demand for steel, says ANZ Economist Maddy Dunk.
China’s manufacturing activity contracted for the first time in nine months in July. ANZ Senior China Strategist Zhaopeng Xing says weaker domestic demand and fading export momentum are behind the contraction.
Indonesia’s annual CPI inflation rate of 2.13% in July was below market expectations for 2.44%. ANZ Economist Krystal Tan says monetary policy is being driven now by the need to support the currency, rather than inflation.
South Korea reports July CPI data later today. Krystal expects core annual inflation to cool slightly to 2.1%. She says recent electricity price falls are likely to offset the Government’s decision to reduce the size of fuel tax cuts.
Cheers
Bernard
PS: Catch you next week with the Reserve Bank of Australia’s August rate decision. Happy first birthday to us! It’s been one year since we launched and today we start our second year. Many thanks to all our contributors, colleagues and listeners.
