On the radar: Markets await Bank of Canada's policy decision due later today
Central Bank watch:
- St. Louis Fed President James Bullard (voting member) stated that a June or July rate hike was not set in stone and that the Central Bank would access latest data before arriving at a decision. He said there exists a case for a rate hike solely based on labour market data from the US, however other data prints have not been as strong.
- European Central Bank (ECB) Vice President Vitor Constancio said he personally expects Eurozone inflation to be above ECB's staff projection of 1.6% in 2018. He added that while the ECB cannot ignore the impact of negative interest rates on bank profitability, the overall effect of the Central Bank's policy has been positive.
- Bank of England (BoE) Governor Mark Carney stated that all the members of the Monetary Policy Committee share the view on the adverse potential impact of Brexit. He also said that the correct response to Brexit may not necessarily entail easing. Further, he added that in the event of a "remain" outcome, he personally sees the next rate move to be up.
Chart: US new home sales in April rose steeply to 16.6% MoM vs. prior (revised) print of (-) 1.3% MoM
Global market snapshot
Global market developments:
- Macroeconomic Data:
o US: New homes sales in April grew steeply at 16.6% MoM vs. prior (revised) print of (-) 1.3% MoM.
o EZ: ZEW survey expectations in May declined to 16.8 vs. 21.5 previously.
o SZ: Trade surplus in April came in higher at CHF 2.50 bn as against prior (revised) print of CHF 2.18 bn. Exports growth came in the positive territory at 0.3% MoM vs. previous (revised) reading of (-) 0.5% MoM. Imports on the other hand slipped to the negative zone, coming in at (-) 3.1% MoM (prior (revised) print: 8.6% MoM).
- US equities ended in the green yesterday amid upbeat new home sales data from the US. Dow Jones and S&P closed up by 1.2% and 1.4% respectively.
- Asian equities are trading in the green this morning, tracking cues from their US counterparts. Hang Seng (2.5%), Kospi (1.2%), Australia's ASX (1.8%), Nikkei (1.6%) and Shanghai Composite (0.3%) are posting gains.
- US Treasuries are trading little changed today, albeit holding on to recent losses. Treasury yields rose by ~5 bps yesterday before retracing slightly thereafter. The 10Y benchmark yield is currently at 1.86%, same as the previous close.
Domestic market developments:
- Indian equities are trading in the green today. Sensex and Nifty are trading higher by 1.3% and 1.4% respectively.
- Indian Rupee is trading stronger relative to the greenback at 67.58 levels vs. yesterday's close of 67.75.
- Indian Government bonds are little changed this morning. The 10Y benchmark yield is presently at 7.47%, same as yesterday's close.
Regards,
ICICI Bank
Contact:
Sonal Surana
(+91-22) 2653-1414 (extn: 7243)
sonal.surana@icicibank.com
Radhika Wadhwa
(+91-22) 2653-1414 (extn: 7206)
radhika.wadhwa@icicibank.com
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