China’s exports and imports fell more than expected in July, which drove stocks down in Asia overnight. US bond yields fell too after Moody’s downgraded 10 mid-sized US banks. Deflationary signs are expected from China later today.
In our deep dive interview, ANZ’s Senior International Economist Tom Kenny unravels what a ‘Goldilocks’ recovery for the US economy would mean for global interest rates.
5 things to know
China’s exports fell 14.5% in July and imports fell 12.4%, which were deeper falls than expected and indicative of slowing demand globally and in China, says ANZ’s Head of Asia Research Khoon Goh.
Chinese stocks fell 2.2% overnight on the news. European stocks were weaker too, although news of a bank windfall tax in Italy didn’t help. US bank stocks fell more than 2% after credit downgrades for some by Moody’s. The US 10 year bond yield fell 6 basis points to 4.01%.
Khoon Goh says the exception to China’s weak export figures was an 83% rise in electric vehicle exports.
He says the falls in trade with China are more to do with weak demand both internally and externally, rather than deglobalisation.
Inflation indicators in NAB’s Business Survey for July were hotter than expected, which the RBA won’t like, says ANZ Economist Maddy Dunk.
Cheers
Bernard
PS: Watch out for Chinese CPI and PPI deflation data today, and the Reserve Bank of India’s decision tomorrow.
