RBNZ remains on the sidelines

Market movers today

  • Market focus will be on the escalating tension between the US and North Korea over North Korea's missile programme.

  • In the UK, industrial production and construction data for June are out today. This is of interest given the negative growth contributions from manufacturing and construction. The NIESR GDP estimate for July (usually a good predictor of actual GDP growth) and trade balance figures will be announced too.

  • In the US, FOMC member Dudley's speech is likely to be the main event. PPI data and the Monthly Budget Statement are also due for release.

  • In Scandi markets, Danish and Norwegian inflation data as well as Swedish industrialand services production data are released today. Please see the Scandi section on page 2 for further details.


Selected market news

North Korea sabre-rattling continues as US seeks to ease tensions. Overnight, state media reported that North Korea is examining plans to fire four intermediate-range ballistic missiles at Guam. The missiles would be fired by mid-August, pass over Japan and land near the island which holds strategically important US military bases. The statement came in response to US President Trump's "fire and fury" warning on Tuesday. Earlier, US secretary of state Tillerson had sought to downplay tensions, saying that North Korea posed no "imminent threat".

UK real estate slump spreads. The RICS survey released overnight showed prices stagnating in July, as the price decline of prime properties in the centre of London spread to neighbouring areas. Meanwhile, prices in Northern Ireland, the West Midlands and the southwest increased.

RBNZ remains on the sidelines. In New Zealand, the central bank left the official cash rate unchanged at 1.75% overnight, in line with expectations. Reflecting recent subdued economic data, the RBNZ said that monetary policy would be kept accommodative for a considerable period.

Geopolitical concerns triggered by North Korea tensions set the course for a modest riskoff reaction on markets yesterday. In Europe, the Euro Stoxx 50 index closed down 1.3% and 10yr Bund yields declined 4bp. In the US, the S&P500 index pared earlier losses to close the day flat. US 10yr Treasury yields held steady around 2.25%. This morning, Asian stocks have reversed earlier gains, while emerging markets sold off more broadly.

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