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Oil Recovered As Bonds Progressed

Oil improved after a sharp decline and both of the European stocks and bonds were in the red on Thursday as the market awaits for the ECB minutes. This would determine the next actions of the central bank. Although, the Fed Reserve showed mixed signals on Wednesday. Bond yields climbed higher again as the benchmark of U.S. Treasuries rose more than 2.34 percent which increased the global borrowing rates.

The market was caught in between the ambiguous results from FOMC minutes and the U.S. employment statistics on Friday. The beginning of G20 summit has been the center of attention after the long-range missile test this week launched by the North Korea.

Argentina’s National Index Rose 1.2 percent in June

In Argentina, consumer prices climbed to 1.2 percent for the month of June according to the national statistics agency NDEC on Tuesday, which is the first time the country has published a national index since the start of President’s Macri office. This is regarded as a “milestone” to rebuild the credibility of the country’s official statistics following the accusation of statistical manipulation. The IMF has lifted its disapproval to the statistics agency.

Previously, the inflation in the greater Buenos Aires area was 1.4 percent in June and 21.9 percent in the past year. Come the first six months of the year, the consumer price increase by 11.8 percent countywide and 12 percent in the area.

The central bank stated that the national index will now be the basis for monetary policy and kept its benchmark interest rate at 26.25 percent on Tuesday but still maintain the inflation target within the 12 to 17 percent. Economists forecast of national inflation will be at 21.5 percent this year.

Yellen Assessed US Economy Growth Target

Fed Chair Janet Yellen said on Thursday that the 3 percent target of the current administration of Trump is “quite challenging” to cope with.

US President Donald Trump pledged during his campaign in 2016 to improve the economic growth by 4 percent, however, the officials trimmed it down to 3 percent and claimed that it might take some time to complete.

Moreover, Yellen mentioned that is "very disappointing," and gave a forewarning that the potential growth of the American economy is now lowered to 2 percent. The chairwoman was asked if it's still possible for the country to gain its three percent goal in the next five years and she answered, "I think it would be quite challenging."

She further stated that higher growth rate requires a great increase in productivity growth which is currently at 0.5 percent, hence, an extreme surge is needed to accelerate and at least few points are regarded as significant.

During the second day of her semi-annual testimony, she said to the Senate Banking Committee that the 3 percent expansion would be wonderful and she’d love to witness it.

The incumbent Chair of the Board is scheduled to end her term on February 3, 2018, if President Trump did not reappoint her for another 4-year term.

Yellen also underlined the things that hamper productivity growth which is related to the dilemma of company reports about looking for qualified laborer, emphasizing the urgency to focus on training worker and further education.

Japan’s Economic Assessment in Moderate Recovery

The Japanese government maintains its basic evaluation on domestic economy indicated in the monthly report for July, which will be released on Wednesday.

According to the Cabinet office, the economy of Japan is in a moderate recovery. In the previous month, the government increased its entire outlook for the first time after six months, underlining the advancement in business investment and private spending.

Nobuteru Ishihara, Economic and Fiscal Policy Minister, submitted the latest report to the economy’s ministerial meeting.

As indicated in the July report, the administration revised its content on producer prices assessment for the first time in 22 weeks, stating that the growth has recently slowed down. As the producer prices are said to be “rising moderately.”

Changes slightly caused a delay on the price increase in petroleum products because of the halt in price hike of crude oil, said by an official from the Cabinet Office.

Moreover, the government keep on hold its valuation on other sectors. While the household expenditure also rose moderately together with exports and capital investments.

The report further mentioned that the economy is projected to recover with an improved income growth and employment in the short-term.

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RBA Maintained its Rates Amid a Global Rate Hike

One of the top central banks stated that the interest rates of the Reserve Bank of Australia will set to be kept at a record low for some time but some hawks push the currency to drop from a two-year peak. The rate hike was canceled out following the increase of interest rate to 0.75 percent in the previous week according to the deputy governor of Australia. She noted that the RBA doesn’t need to raise their rates when other central banks in the world did which opposes the recovery of the Australian currency after a rise in mining investment for a decade halted. The development of the world economy may be beneficial for the country but it works against the currency.

Technological Advancement Impact to Monetary Policies

Development in the Information Technology sector and rising adaptability of the labor market in the past years has unsurprisingly curb inflation which could significantly affect monetary policy according to the ECB Executive board member Yves Mersch on Monday. He mentioned that advancement in logistics allowed the growth of value chains and e-commerce globally. It has improved the transparency of pricing domestically and across countries.

These modifications in labor sector could indicate that inflation occurs at a quicker rate with a lower employment in the past that affects the relationship between employment and wage growth and eventually affect the monetary policy. Hence, Mersch points out how improvement in technology reacts to “shocks”, the transition from the exchange rate movement into inflation and its influence from the local community towards global advancement and rise in prices.

These raises concern on the efficacy of ECB’s policies to bring back its price growth to its target. Hence, actions are planned for long-term financial management to meet the obstacle come along the way. Although, these policies are deemed to be unnecessary when conditions stabilize.

IMF Cut Growth Forecast for US Economy

The International Monetary Fund downgraded its growth outlook for the United States due to concerns regarding Trump’s capacity to carry out his promises to the economy to stir the American economy.

Although the Washington-based organization provided a positive forecast in April, they had trim it down to 2.1 percent for this year and based on earlier projections for 2018, the US economy will gain 2.3 and 2.5 percent growth.

While the global growth was held at 3.5 percent in 2017 and 3.6 percent for the next year according to the prediction of IMF managing director Christine Lagarde and described it as "quite well anchored".

However, based on the World Economic Update, the IMF mentioned about the uncertainty towards the policies of President Donald Trump since it is a major factor in the leery growth projections for the US.

Pres. Donald Trump got the presidential position six months ago, citing his plans about tax reductions, looser regulation and major infrastructure spending which triggered a rally on Wall Street. But the policies were stalled in the US Congress as the government continues to battle over other issues, like health care reform.

Positive German Business Confidence as Economy Strengthen

German firms are preparing for a bountiful period on the back of a slackening summer season.

Business climate of the Germany boosted for the sixth month in July, claimed by the Ifo Institute. According to the poll, which includes 7,000 companies under the construction, manufacturing and trade sector around Europe’s biggest economy, the index increased to 116.0 which is adjusted from 115.2 last month. This was the highest level recorded for almost 26 years, compared with the Bloomberg’s median estimate showing a decline to 114.9.

The euro moved higher following the issued data and continued to trade at $1.1660 at 10:24 a.m. Frankfurt time.

Ebullient sentiment shows that the economy of Germany had performed strongly earlier this year and bound to run over until the second half.

The continuous decline in unemployment had supported the domestic demand as the Bundesbank projected that the “lively” demand for exports will lead the manufacturing as a major growth driver.

Clemens Fuest, Ifo President, said that “Sentiment among German businesses is euphoric”, citing that the German economy will stimulate ahead.

Moreover, the country moved at a fast pace in a year during the Q1 while the International Monetary Fund is confident enough towards the nation’s growth outlook after upgrading its forecast for 2018 in the past months.

The organization further mentioned that the development for 2017 is 1.8 percent and 1.6 percent in 2018, bolstered by the strong domestic demand and stabilized international trade.

The Ifo gauges the present economic situation will gain 125.4 from the adjusted 124.2 and the measures of confidence will expand to 107.3 from 106.8.

The GDP figures for the month of April to June is going to release on August 15.

Japan Household Spending Grew 2.3% in June

Japan’s household expenditure in the previous month accelerated most in 2015 since the available jobs heightened to its fresh 43-year highs. This shows that as the labour market tightens, it helps push wages and consumer spending up in a gradual pace.

Last week, the BOJ retained its monetary policy, however, pushed back again to reach its price goal, underlining the gap between the weak inflation and steady growth. And further emphasized that it may take some time to scale down its massive stimulus.

The Japanese economy grew at an annualized 1.0 percent earlier this year, indicating a consecutive growth for the fifth time on strong exports and expansion in personal consumption.
According to analysts, the domestic demand is the main driver for a sustained growth in net exports but would probably reduce growth in GDP for the second quarter.

The positive signs for household consumption consist of 60 percent of the economy and gained 2.3 percent in the year until June, that jumped for the first time after 16 months and acquired the largest annual gain in August 2015. While the median estimate of the economists is 0.6 percent which is further based on the polled data of Reuters by the Ministry of Internal Affairs and Communications issued on Friday.

Moreover, the retail sales gained 2.1 percent in the year to June as shown in another set of data.