UNITED STATES

US stocks rebounded on Friday after good earnings reports and better-than-expected Q2 GDP figures. The US economy slowed in Q2 to 2.1% GDP growth YoY but this was higher than analyst expectations of 1.9% in a MarketWatch poll as healthy consumer demand offset weakness in manufacturing and fixed investment. The S&P and NASDAQ closed 0.74% and 1.11% higher respectively to set fresh highs while the DOW closed 0.19% in the green. Yield on 10Y USTs closed lower at 2.0703%.

UNITED KINGDOM

Prime Minister Boris Johnson’s maiden speech in the House of Commons on Thursday did not only ruffle feathers at the top of the EU but also seemingly set fire to the resolve of members of his cabinet to deliver Brexit at all costs, no-deal included. EU chief Brexit negotiator Michel Barnier and European Commission President Jean-Claude Juncker did not take too well with Boris’ rhetoric, with Barnier writing to the other 27 EU member states about the raised stakes for a no-deal while Juncker told the premier over a call that the existing deal was the “only agreement possible”. New chancellor Sajid Javid is reportedly preparing to announce more than £1 billion in additional funding for a no-deal Brexit to add to the £4.2 billion already allocated under Philip Hammond’s tenure. Michael Gove, the minister in charge of no-deal preparations will be chairing a committee that will meet daily as well join an exit strategy committee which will meet twice every week chaired by Boris himself. The pound closed about 0.5% lower on Friday at $1.2384 while yield on 10Y UKTs closed lower at 0.6862%.

EUROPEAN UNION

The eurozone’s Q2 GDP figures out on Wednesday are likely to give weight to Mario Draghi’s condemning comments that outlook is getting “worse and worse”. Growth is forecast to come out at 0.2%, a pace that will not do much to help the ECB President’s push to get inflation higher. The German economy is expected to have contracted in Q2 as is also expected for Italy but confirmation of the forecast will have to wait until mid-August for German data while Italy’s data is due Wednesday. 10Y bunds’ yield fell to -0.3784 while the euro closed lower against the dollar to $1.1128.

ASIA

Asian stocks opened mostly lower on Monday ahead of an expected Fed rate cut and a resumption of US-China trade talks. Stocks had not made any recoveries from their depressed openings in afternoon trading with the NIKKEI and CSI trading 0.37% and 0.21% lower. The HANG SENG fell even further from its -1.3% opening to trade 1.46% down in the afternoon as protestors again clashed with the police. Australia’s ASX was the only shining light in the region, firming on opening gains to trade 0.58% higher in the afternoon.

TURKEY

Turkey’s central bank governor Murat Uysal cut the benchmark rate by 4.25%, a figure significantly higher than the average forecast of 2.5%, but this was not enough for President Erdogan. While commenting that a cut needed to be done, Erdogan said the “cut is not enough” and called for cuts to continue until year end albeit gradually. Erdogan threw a jibe at the former governor Murat Cetinkaya commenting on how markets responded normally to the higher-than-expected cut. The lira closed firmer to the dollar at 5.6672 while TURKEY 47s rallied to trade in the mid-85s.

LATAM

Argentina is slowly continuing economic recovery ahead of a primary vote in August for the presidential elections. Government data published on Thursday showed an expansion of 0.2% in May month-on-month and 2.6% YoY; this was the second consecutive monthly increase and the first positive YoY figure since March 2018. Incumbent Mauricio Macri’s main rival Alberto Fernandez is seemingly bent on ending the austerity measures that have been put in place by Macri as he promises to raise retiree pensions by 20% once in office. In a seeming jab at Macri, Fernandez said “I don’t want to be Wall Street’s candidate. I want to be Argentines’ candidate.” The peso closed slightly firmer against the dollar at 43.3400 while ARGENT 47s were higher, in the mid 73s.

RUSSIA

The Bank of Russia reduced interest rates for a second time this year on Friday, shaving 25bps off the key rate to 7.25%. The bank also signaled more cuts to come saying in a statement, “If the situation evolves in accordance with the baseline forecast, the Bank of Russia expects to lower the key rate at one of the next meetings and return to the neutral rate in the first half of 2020,” in reference to the 6-7% target. The bank did warn that inflation risks remain particularly highlighting the risks posed by the country’s fiscal policy as the government looks to start spending on infrastructure projects. The ruble closed weaker at 63.3549 to the dollar while RUSSIA 47s were slightly lower closing in the mid-112s.