Daily Overview of Global Markets & the SEE Region (Thursday, 1 August, 2019)
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Mirroring the negative tone in Wall Street overnight, Asian equity markets traded in the red following July’s FOMC’s meeting, which toned down market expectations of a prolonged easing cycle. As widely expected, the Fed reduced the target range for the fed funds rate by 25bp to 2.0-2.25%. Nevertheless, slightly tilted to the hawkish side, Fed Chairman Jerome Powell noted that he does not see the rate cut as “a mid-cycle adjustment to policy”, highlighting that it was not “the beginning of a lengthy cutting cycle.” In response, the 2yr10yr yield curve flattened at 14bps, the lowest level since May, with shorter-dated Treasury yields rising on Wednesday as investors scaled back expectations on future rate cuts and longer-dated Treasury yields falling on the Fed’s muted inflation outlook and the stop of its balance sheet normalization two months earlier. In FX markets, dragged down by the US dollar’s strength, the EUR/USD plunged to 1.1032, its lowest level since mid-May, before paring losses to trade around 1.1045 in European trade at the time of writing.
GREECE: According to the Hellenic Statistical Authority, the overall volume index in retail trade in May 2019 decreased by 2.4%YoY, while the seasonally adjusted overall volume index increased by 0.3%MoM. Meanwhile, the seasonally adjusted IHS Markit Manufacturing Purchasing Managers’ Index (PMI) rose to a 3-month high of 54.6 in July from 52.4 in June, signaling a substantial improvement in the health of the sector and extending the current sequence of expansion to 26 months.
SOUTH EASTERN EUROPE
CYPRUS: The Economic Sentiment Index (ESI) declined in July to the lowest level of the last twelve months.
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