The PBoC has bolstered support for the renminbi, fixing the rate well above market expectations and squeezing funding costs higher for short sellers. US existing home sales fell unexpectedly. Europe’s current account deficit surged.
In our bonus deep-dive interview, ANZ’s Head of G3 Economics Brian Martin explains why the real neutral interest rate in the US is up around 100 basis points to 0.5-1.0% since Covid.
5 things to know
US existing home sales fell 2.2% in July. A flat result was forecast. Home sellers aren’t listing to avoid refixing their 30-year mortgage rates over 7%.
The PBoC fixed the CNH yesterday at 7.1992 per US$, much stronger than market forecasts for 7.3103 and the widest gap since 2018. It also squeezed funding costs for currency short-sellers up to 3.2%, also a five-year high.
Europe’s current account surplus surged to €36b in June from €7.9b in May as imports and energy costs fell, helping the ECB fight inflation.
NZ retail sales figures for the June quarter are due later today. ANZ’s NZ Chief Economist Sharon Zollner sees a flat result, with economic activity slowing.
ECB President Christine Lagarde is expected to be hawkish in her Jackson Hole speech on Friday night, given the ECB’s rate cuts aren’t over yet.
Cheers
Bernard
PS: Look out for data later today showing the first signs of global factory activity in August, with the release of flash PMI figures.
