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Daily Overview of Global Markets & the SEE Region (Monday, 8 July, 2019)
HIGHLIGHTS
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS:  Overall, the US’ June employment report which was released on Friday, suggests that although the pace of employment growth has slowed lately, it is still robust, but with no signs of major acceleration in wages, denting, thus, expectations for an aggressive 50bps Fed rate cut at the next policy meeting on July 30-31. Fed Funds futures are now assigning a probability of less than 10% for a 50bps rate cut later this month from around 25% before the release of the non-farm payrolls data while the odds of a 25bps rate cut are still seen at 100%. For further clues on the near term outlook of the Fed’s monetary policy, focus this week is on Fed Chair Jerome Powell’s semi-annual testimony before the House Financial Services Committee on 10 July and before the Senate Banking Committee the next day. Meanwhile, US Treasury yields were hovering below Friday’s post-payrolls highs, while in FX markets, the USD retained a firm tone.
GREECE: Kyriakos Mitsotakis, the leader of center-right NEA DIMOKRATIA, the main opposition party, won y-day’s election with a clear majority of 39.8%, securing158 seats in the 300 seats parliament against 31.6% and 86 seats for the SYRIZA party of incumbent Prime Minister Alexis Tsipras.
SOUTH EASTERN EUROPE
BULGARIA:Â The Eurogroup which convenes today is expected to discuss, among others, Bulgaria’s progress in its efforts to gain an ERM-II entry invitation.
CESEE MACRO & MARKET DEVELOPMENTS: This week’s calendar is broadly filled with June’s inflation data for the Czech Republic, Hungary, Romania and Serbia. Today’s focus in the region is on Turkey’s President, Recep Tayyip Erdogan’s decision to replace Turkey’s central bank Governor over the weekend which fueled concerns that key interest rates will be lowered quicker than expected.
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