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How to get growth?

  • US manufacturing sentiment data disappointed - although sentiment has been overreacting (positively and negatively) to underlying economics of late. Markets probably care more about the Fed reaction to the data than the data per se - and we have three Fed speakers scheduled today.
  • Japan's monetary base grew a modest 31.6% yoy in May, as the illusion of Abenomics continues. What matters is not the monetary base, but what happens to the monetary base. In that regard wage growth (0.3% yoy, largely through special factors) is not that helpful.
  • UK retail sales showed what the (very late) ending of winter can achieve with a 1.8% like for like increase in May. The UK consumer is benefitting from the Bank of England schemes, even if the corporate is not. Meanwhile the ECB seems to have given up on trying to encourage lending directly.
  • The Reserve Bank of Australia left interest rates unchanged as expected, but sounded relatively dovish in its statement. We think the soft nature of the domestic economy will lead to an Australian rate cut in the months ahead.

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