US stocks and bonds are rallying after the first indicators of global business activity in August were much weaker than expected, reinforcing market expectations central banks will be able to cut interest rates sooner, and by more.
In our bonus deep-dive interview, we hear from ANZ’s Head of FX Research Mahjabeen Zaman about whether the BRICS have any realistic hope of breaking the global financial system’s reliance on the US dollar as a reserve currency.
5 things to know
Flash PMI surveys done globally in August showed factories and services businesses are contracting more sharply than expected.
US stocks are up one to two percent this morning and US bond yields are down sharply after the weaker than expected flash PMIs saw investors shift expectations to lower interest rates, which makes stocks more attractive.
European and German business activity was particularly weak in the flash PMIs. ANZ’s Head of G3 Economics Brian Martin sees the ECB holding its policy rate next month.
ANZ Economist in Singapore Krystal Tan expects central banks in South Korea and Indonesia to hold their policy rates later today.
New Zealand retail sales volumes fell 1.0% in the June quarter when a flat result was expected. The last year’s rate hikes are rapidly slowing spending, says ANZ NZ Senior Economist Miles Workman.
Cheers
Bernard
PS: Look out for monetary policy decisions from Seoul and Jakarta later today, before tomorrow night’s big speeches from Fed Chair Jerome Powell and ECB President Christine Lagarde at Jackson Hole.
