Markets Overview

类型：投资策略机构：大华银行有限公司研究员：大华银行研究所日期：2015-07-15

HIGHLIGHTS AHEAD

    The key political event today is the Greek parliament vote on thebailout package on Wednesday (15 Jul) while the Bank of Japan willconclude its two-day meeting on Wednesday with its decision due duringAsian hours (11am to 2pm Singapore time) followed by the Bankof Canada monetary policy decision (10pm Singapore time). We donot expect BOJ or BOC to change their present policy stance but thereare quite a few market watchers expecting a 25bps rate cut from theCanadian central bank to bring the policy rate to 0.5%, according tothe Bloomberg survey (as of 14 Jul). As for the US, the focus is likelyon FOMC Chair Janet Yellen’s semi-annual testimony to the HouseFinancial Services panel today (15 Jul). The Monetary Policy Reportsto the House and Senate committees are delivered twice a year, in Februaryand July. In her speech on the US economic outlook in Clevelandlast Friday (10 Jul), Yellen said that she sees the Fed likely to raise interestrates at some point in 2015, but also highlighted her concernsabout the labor markets. In addition to Yellen’s House testimony (15Jul), there will also be the release of the Fed’s latest Beige book laterduring US trading hours (16 July, 2am Singapore time).

    The US data docket includes the May business inventories, the JunPPI, the July Empire manufacturing survey, June industrial productionand June capacity utilization but the data docket for therest of the developed economies is much lighter with just France JuneCPI and the UK June jobless claims and May earnings/unemploymentdata. As for the US financial markets, today we will get the corporateearnings reports from US Bancorp, BlackRock, Bank of America, Intel,and Delta Airlines.

    The IMF continues to weigh in on the Greek debt bailout issue ina preliminary debt-sustainability analysis released Tuesday (14Jul) as it reported that “Greece’s debt can now only be made sustainablethrough debt relief measures that go far beyond what Europe hasbeen willing to consider so far.” It highlighted that the bank closuresand capital controls have exacted a “heavy toll” on Greece’s financialsystem and the economy, leading to a dramatic deterioration in theability of the country to pay its debts. And the IMF now estimated thatGreece’s debt to peak at close to 200% of GDP in the next two years (ascompared to 170% of GDP by 2017 in its analysis released 2 July) whilethe provision of debt relief by extending maturities would require a“very dramatic extension” on the order of 30 years on the entire stockof European debt, including new assistance.

    The key event overnight (14 Jul) was the Iran nuclear agreement withthe 6 major world powers. The deal was supposed to be negative for oilprices (as it will bring unto markets additional crude supply from Iran)and likely further divide US politics. However, while oil prices initiallyweakened on the Iran nuclear deal news, they eventually ended higheron Tuesday (14 Jul) amid speculation any rise in Iranian exports willonly be slow after the nuclear deal. The US stock markets continuedits good run on Tuesday (14 Jul) as US equities rallied for the fourthstraight session as we see the start of the flood of US corporate earningsreports and on a possible US$23bn bid for US chip maker Micron fromChina’s Tsinghua Unigroup. The US dollar retreated slightly against the USD and the yen after a poor June US retail sales result, a tumble in NFIB small business survey andunexpectedly weak import prices fueled speculation that the Fed may delay hiking rates but marketsrefrained from taking any big FX bets ahead of Yellen’s Congress testimonies on 15 & 16 July.

    Investors’ appetite for FX bets were also curbed by increasing skepticism about Greek PM Tsiprasability to get the Greek parliament vote for the latest bailout agreement conditions. The poor USeconomic data raised concerns again that the Fed plan in raising short term interest rates may bedelayed did help stem the recent US Treasury market selloff and UST prices rose as the yields fellacross the curve for the first time in 4 sessions.

    For Asia today (15 Jul), China’s data releases will be the main focus at 10am, with 2Q15 GDPreport likely to show headline figure slowing to 6.8%y/y from 7% in 1Q15, the first sub-7% readingsince 1Q09 when the global financial crisis was at full blast. Other data released at the sametime include Jun retail sales, expected at 10.2%y/y from 10.1% in May; Jun industrial productionexpected at 6%y/y from 6.1% in May, and urban fixed asset investment at 11.2%y/y YTD, from11.4% in May.

    Elsewhere in Asia, we will receive Malaysia’s Jun CPI, at 12pm, expected at 2.4%y/y from 2.1% inMay. Indonesia’s external trade report for Jun also will be due at 12pm, with exports looking toslump a further -16.15%y/y from -15.2% in May. At 1pm, Singapore’s retail sales for May are seenrising 3%y/y, slower vs. 5% in Apr.