Markets Overview

HIGHLIGHTS AHEAD

    The Fed Reserve’s July FOMC decision (released at 30 July 2015,2:00am Singapore time) was as expected with the Fed keepingpolicy rates (and pretty much everything else) unchanged in anunanimous decision for this meeting, and provided no fresh leadsas to the timeline of the first rate hike, specifically if the SeptemberFOMC is the one the market has been waiting for. The July FOMCdid not materially change market’s & our expectation for a SeptemberFOMC rate hike.

    Hot after the heels of the July FOMC, the key event today (30 Jul) is thefirst estimate for the US 2Q-2015 GDP advance estimate releasewhere the expectations is for a rebound but it remains unclear to ushow strong this rebound will be given the contraction suffered in 1Qwas a milder -0.2% (versus the -2.1% endured in 1Q 2014) while theretail sales momentum tapered off in June and the trade deficit remainedabove US$40bn in May but jobs market continue to see goodimprovement with jobless claims dropping to the lowest since Nov1973. (Consensus forecast is looking for +2.5%q/q SAAR, while we areexpecting a higher 3.2% rebound).

    And on Thursday (30 July), other than the 2Q-2015 GDP, we will havethe usual weekly initial jobless claims and the weekly Bloomberg consumercomfort survey. For the rest of the developed economies, wehave the Japan June vehicle production, the German July CPI & Julyunemployment claims data, various July confidence surveys for theeuro-zone & constituent economies, UK July GfK consumer confidencesurvey. Early Friday morning, we have a flood of June economic datafor Japan including unemployment, overall household spending data,CPI inflation, housing starts & construction orders. The US corporateearnings report today will feature Colgate-Palmolive, Marriot, ConocoPhilips,P&G, LinkedIn Corp, T-Mobile, Time Warner and Expedia.

    The US stock markets were already in positive territory for most of thetrading session and extended their gains after the Fed Reserve keptrates unchanged on Wednesday (29 Jul) and provided no fresh leads asthe rate liftoff timetable. The US dollar strengthened against the euroand the yen after the July FOMC decision remain silent on the timingfor a rate increase which still kept the hopes of a September rate hikein play. The US Treasuries however was listening to a different tune asthe UST pared its initial declines after Fed’s lack of leads for the ratehike timing and the persistent weakness from low inflation set bondinvestors thinking that the Fed could delay raising rate in the SeptemberFOMC. US & global oil prices rose on Wednesday after the US Departmentof Energy’s weekly petroleum report showed an unexpected4.2million barrels decline in US commercial crude inventories to 459.7million while US crude production also dropped by 145,000. Gold priceextended its weak bias for the second straight session on Wednesdayas the USD was broadly stronger and concerns that a September FOMCrate hike is still on the cards.

    It will be a light day for Asian data today. We are expecting the SingaporeMinistry of Manpower to release 2Q 2015 unemployment rate.

    Thereafter, Bloomberg will release the economic survey for India.