JGBs were unfazed by Monday’s data which showed Japan’s economy grew a modest 0.2 percent in the second quarter, compared with a median forecast for a 0.7 percent expansion. Consumer spending is weak, and the reason is low wage gains.
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With consumer spending, a hefty economic component accounting for 60 percent of total gross domestic product, also weighing on the economy, with an uptick of just 0.2 percent in the quarter, the failure of “Abenomics” is very much in the spotlight, with the weaker-than-expected growth data causing economists to question his policies’ effects on deflation, market perception and participation and consumer spending.
The need for further policy action in Japan was underlined by its subdued second-quarter economic reading, leaving the Nikkei .N225 down 0.3 percent. Lower expectations of a USA rate hike have been prompted by an overwhelming trend of global monetary easing by major central banks, as well as some very recent U.S. data that has shown some unexpected weakness.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent after a strong run.
The jump in US equities helped underpin markets in London (.FTSE) and Frankfurt (.GDAXI), which added to gains and were up 0.36 percent and 0.24 percent respectively.
Yields on British 10-year gilts touched record lows on Monday, falling to 0.503 percent. These results have also had an impact on the rates across Europe.
However, corporate investment fell 0.4 percent.
As the return on bonds continued plumetting, the equities seemed to be the best attractive options.
The U.S. S&P 500, Dow and Nasdaq stock indexes all closed at all-time highs.
Investors have recently lengthened the odds on any Fed hike this year, with futures 0#FF: implying around a 46 percent chance of a move in December.
The ministry said the central government’s debt had climbed by 4.10 trillion yen (40.48 billion United States dollars) from three months ago, to stand at 1,053.47 trillion yen (10.40 trillion U.S. dollars) as of the end of June.
This combination of a very resilient Japanese yen and lagging United States dollar has served to pressure USD/JPY back down towards major psychological support around the 100.00 level. The euro was steady at $1.1157 EUR= having held in a $1.1050 to $1.1230 range for last couple of weeks. It stood at $1.2897 GBP= and ever closer to the post-Brexit trough at $1.2797.
ENERGY: Benchmark U.S. crude oil rose 14 cents to $44.63 a barrel in electronic trading on the New York Mercantile Exchange. The pan-European FTSE 300 (.FTEU3) edged up 0.02 percent.
“In general the negative rate environment, particularly in the euro zone and Japan, is going to keep gold well bid”, Mitsubishi Corp strategist Jonathan Butler said.
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US retail sales were flat in July, the Commerce Department said, disappointing forecasts for a 0.4% rise and slowing sharply from growth of 0.8% in the preceding month.
