A.M. Notes

Research evidence excerpt

A.M. Notes

In any event, oil prices are focused on the "it's over" statement, with WTI surging to over $75 at one

point (currently ~$74), while Brent is at ~$78. And, European stock markets are down across the board,

led by Spain's IBEX 35 (-2.5%), followed by the DAX (-2%). Asia was mostly lower as well, with the

KOSPI down over 5%, or 20.5% below June 22nd's record high, putting it into bear market territory. The

USD index is modestly stronger, with the majors split down the middle. The KRW is actually the

strongest of the bunch, briefly touching 1,498.81 ahead of SK Hynix's "multiple times" oversubscribed

share sale. Global bond markets are in sell-off mode, with a notable move in JGBs... the 20-year yield hit

a 30-year high of 3.86%.

Second on the list was the NZD, which rallied to as high as $0.5720 after the RBNZ raised its official cash

rate 25 bps to 2.50% overnight. Remember: it was hawkish at its last meeting on May 27, which seems

like eons ago. Notwithstanding what is happening this morning, given the sizable declines in oil prices

since the signing of the MOU, there had been doubts raised over whether the central bank would

continue to tighten. According to the Media release, despite the drop in energy prices, "theeffectsof

theshockwilllingerforsometimeandtheoutlookformedium-terminflationpressuresremains

uncertain". And the RBNZ is not ready yet to sit back and watch how things play out. It warned that

"somefurtherreductioninmonetarystimulusislikelytoberequiredtoreturninflationtothe2percent

targetmid-point."It is just unclear when that next move will be. "TheCommitteeagreedthatwhile

furtherOCRincreasesappearlikelyatupcomingmeetings,theirtimingishighlyuncertain." So... watch

the inflation signals.

Keep an eye on some updated numbers coming out of the IMF...