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OVERNIGHT MARKET
UPDATE:
·
In the US, headline CPI rose 0.1% m/m and 2.0% y/y,
while core inflation rose 0.1%, slightly less than market expectations of a
rise of 0.2%. On the housing front, starts bounced back sharply in July,
rising 15.7% m/m to an annualized pace of 1093k after falling by a less than
initially reported 4% m/m in June. The strength in the month largely stemmed
from a large rise in multi-family units, which rose 28.9% m/m. Building
permits also beat market expectations, rising 8.1% m/m in July.
·
The UK CPI report for July significantly undershot
market expectations, raising concerns the Bank of England may delay
tightening policy. Headline CPI fell 0.3% m/m to see the annual pace soften
to 1.6% from 1.9% in June (mkt: -0.2% m/m & 1.8% y/y). Core inflation
also eased to 1.8% y/y from 2.0% y/y.
·
In currency
markets, the USD was in demand after US housing indicators suggest that the
housing market is picking up. NZD remained weak after the dairy auction
showed little signs of a price rebound, and GBP was sold after the CPI
printed weaker than expectations, continuing to fuel expectations that the
BoE can afford to wait.
·
US Treasuries
ended the session down slightly with early strength reversed after the
release of solid housing market data. Both the 2-year bond yield and the
10-year bond yield ended the session 1 bp higher at 0.43% and 2.40%
respectively.
·
US equities
gained on the open and continued to rise through the day, led by retail
stocks (+1.9%) on a number of positive earnings reports. The S&P 500
increased 0.5% to 1,982, the Nasdaq rose 0.4% to 4,528, while the Dow Jones
increased 0.5% to 16,920.
·
Oil prices fell
overnight as investors sold September contracts before they expire and
purchased cheaper contracts further out. WTI futures were 2.5% lower to
USD94.48 per barrel while Brent futures fell 0.3% to USD101.58 per barrel.
·
The spot gold
fell 0.2% to USD1,295.7 per ounce as US core inflation growth remained
unchanged, reducing demand for gold as an inflation hedge.
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INDICATIVE MAJOR CURRENCIES
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