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Tuning out 

Aziz Sunderji, Zoso Davies, Juan Prada

  • Macro price action was muted yesterday. Most equity bourses closed marginally in the green, as did fixed income with BTP spreads rallying an impressive 5-10bp across the curve. In FX, the major move was in USDTRY, with the lira making gains. Against this calmness, there were some significant single stock moves; NFLX opened down 14% on disappointing earnings, though it took back most of its early losses over the session. Equities were up in Asia as of midday local time today with the dollar holding its advance after Fed Chair Powell’s testimony.
  • Inflation data will be in focus today. In Malaysia, the CPI sharply undershot our and consensus expectations. We expect Euro Area HICP to be confirmed at 0.1% m/m (2.0% y/y) for June. In the UK, we expect June CPI to print at 2.6% y/y, in line with expectations. There will also be inflation data in South Africa.
  • In Korea, the MOSF turned notably more downbeat in its economic outlook for H2 18 today. Following the July monetary policy meeting where one member dissented in favour of a hike, near-term rate hike expectations have increased. However, we think the downbeat rhetoric from the Finance Minister is more aligned with BoK Governor Lee's views. We maintain our forecast and expect the rate hike to take place in Q4 18.
  • Our US Q2 GDP tracker rose to 5.3% following the June IP report. US industrial production rebounded sharply in June, rising 0.6% on the month. The components of the IP report that inform our GDP tracking estimate point to stronger PCE consumption and inventory accumulation.
  • Meanwhile, in the UK job growth continues to defy a slowing economy. Job creation remains strong and broad based, according to the May Labour report. Though average weekly earnings set a slightly slower pace than in the previous two months, the breakdown continues to show an impressive pickup in hourly wages (strongest pace of growth since 2008), offset by fewer hours worked per job.
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