In today's economic briefing, we delve into the intriguing world of global markets and their reactions to geopolitical events. The relief rally sparked by the US-Iran deal highlights the delicate balance between financial markets and international relations. While commodity markets remain cautious, the potential for risk premiums to retreat offers a glimmer of hope for commodity-importing economies.
However, the economic data paints a mixed picture. American manufacturing output has stalled, and the June factory survey for the New York region indicates a slower-than-expected improvement. Meanwhile, the NAHB survey of housebuilders reflects ongoing concerns about affordability.
On a positive note, Canada's industrial production and housing starts remain resilient, with strong sales in key sectors. India's exports have reached a record high, a promising sign for the country's economic growth. The EU's industrial production has also shown signs of recovery, albeit modestly.
One of the most intriguing developments is the US pressure on France regarding its digital services tax. Big Tech's influence and support for the US President have become a tool to avoid taxation, raising questions about the risks of relying on US tech giants.
In terms of market movements, bond yields have seen some fluctuations, with the UST 10-year yield dropping slightly. Wall Street opened strongly, with the S&P500 and Nasdaq both in the green. European markets were mixed, while Tokyo's impressive 5% gain stood out.
The price of gold continues its recovery, while oil prices have dropped significantly. The Hormuz transits remain minimal, reflecting the ongoing tensions in the region.
As for the US-Iran deal, it's a delicate situation. The US went to war with Iran over a perceived lack of negotiation, and now a deal is being touted as a victory. Personally, I think it's a delicate balance, and the potential for future instability remains high.
The New Zealand dollar has remained relatively stable, with minor fluctuations against other currencies. Our TWI-5 has also seen a slight decline.
In conclusion, today's economic briefing highlights the intricate dance between global markets and geopolitical events. The US-Iran deal, while providing temporary relief, underscores the ongoing tensions and the potential for future volatility. The economic data, while mixed, offers glimpses of resilience and recovery. As always, staying informed and aware of event risks is crucial in navigating these complex times.
