20180703-大华银行-Markets_Overview_5页_217kb

Global Economics & Markets Research Summary

Core Content

This report provides an overview of global economic and financial market conditions as of July 3, 2018, including market highlights, central bank outlooks, FX rates, stock indices, commodities, and economic data. It also includes market holidays and a disclaimer regarding the informational nature of the content.

Main Highlights

Market Overview

• Shortened Trading Day: July 4 is a U.S. Independence Day holiday, resulting in an early close for U.S. equities and bonds markets.
• U.S. Data: Expectation of U.S. factory orders and durable goods orders for May.
• Asia Data: South Korea CPI for June was released earlier, followed by Hong Kong retail sales at 4:30pm.

Central Bank Outlook

• RBA Decision: The Reserve Bank of Australia is expected to keep the Cash Rate at 1.50%, unchanged since August 2016.

Key Information

Foreign Exchange (FX)

• USD Strength: The USD gained 0.4% to 94.87 on the dollar index, recovering from previous losses.
• Major Currency Movements:
  • EUR/USD: Closed 0.4% lower at 1.1639.
  • GBP/USD: Traded 0.5% lower to 1.3143.
  • USD/JPY: Gained 0.1% to 110.90, but stalled at the key 111 level.
  • CNH (RMB): Weakened to 6.6877/USD, marking the first decline since October 2017. UOB predicts a weaker CNY fixing at 6.6347/USD.
  • IDR: Continued to be under pressure, ending at 14,384/USD.
  • USD/SGD: Hit an 8-month high of 1.3715, with the SGD NEER expected to trade between 1.3645 and 1.3715.

Equities

• U.S. Stocks: Reversed early losses to finish higher, led by a rebound in tech shares. The Dow Jones rose 0.2%, the S&P 500 added 0.3%, and the Nasdaq Composite increased 0.8%.
• Asian Stocks: Resumed a sell-off, with the SHCOMP down 2.5%, Nikkei 225 down 2.2%, and the FTSE Straits Times Index closing 0.9% lower.

U.S. Treasuries

• Yield Increase: The 10-year U.S. Treasury yield rose by 1 bp to 2.871%.
• 2s10s Spread: Flattened further to 32.2 bp as haven demand decreased with a stock rebound.

Commodities

• WTI Crude: Edged lower by 0.3% to $73.94/bbl after a week of gains, with concerns over potential Saudi oil output increase.
• Gold: Pared Friday's gains to end 0.8% lower at $1,242.04/oz, pressured by the rising dollar.

Economic News & Data

• South Korea:
  • CPI (y/y): 1.5%, below expectations.
  • Core CPI (y/y): 1.2%, also below expectations.
  • This suggests the Bank of Korea may keep interest rates unchanged at its July 12 meeting.
• China:
  • Caixin manufacturing PMI: 51.0 in June, slightly down from 51.1 but still above 50.4 a year ago.
• Thailand:
  • Headline inflation: 1.38% y/y, down from 1.49% in May.
  • Core inflation: 0.83% y/y, up slightly from 0.80% in May.
• Indonesia:
  • Headline inflation: 3.12% y/y, down from 3.23% in May.
  • Core inflation: 2.72% y/y, stable compared to May.
  • Revised H2 2018 inflation forecast to 3.50%, within the official range of 2.5-4.5%.

Market Holidays/Events

• Independence Day (US): July 4.
• HKSAR Establishment (HK): July 2.
• Marine Day (JP): July 16.
• Asarnha Bucha Day (TH): July 27.
• King's Birthday (TH): July 30.
• Liberation Day (SK): August 15.
• Independence Day (IN): August 15.
• Independence Day (ID): August 17.
• Ninoy Aquino Day (PH): August 21.
• Hari Raya Haji (SG/MY/ID/IN): August 22.
• National Heroes Day (PH): August 27.

Summary of Key Indicators

Summary of FX Rates (as of 02 Jul 2018)

Summary of Stock Indices (as of 02 Jul 2018)

UOB's SGD NEER Estimation

• Mid-Point: 1.3718
• Range: 1.3645 - 1.3715

Interest Rates

• USD Fed Funds Rate: 1.75-2.00%
• EUR Refinancing Rate: 0.00%
• GBP Repo Rate: 0.50%
• AUD Cash Rate: 1.50%
• NZD Cash Rate: 1.75%
• JPY Base Rate: 0-0.10%
• SGD 3-Mth SIBOR: 1.52%
• MYR O/N Policy Rate: 3.25%
• IDR 7-Day Repo Rate: 5.25%
• THB 1-Day Repo Rate: 1.50%
• PHP O/N Reverse Repo: 3.50%
• INR Repo Rate: 6.00%
• TWD Discount Rate: 1.375%
• KRW Base Rate: 1.50%
• HKD Base Rate: 1.00%
• CNY 1-Yr Working Capital: 4.35%

Disclaimer

• This document is for informational purposes only and does not constitute investment advice.
• UOB Group makes no guarantees regarding the accuracy or completeness of the information provided.
• The views expressed are the author's and may differ from UOB Group's actual trading positions.