- Second-quarter GDP growth of 4.3% falls short of Beijing’s 4.5% goal
- Jump in Spanish consumer prices bolsters ECB hawks; JGB auction sees six-year demand peak
Momentum is building among Chinese economists for a fresh round of fiscal and monetary stimulus after economic growth slowed in the second quarter, missing the government’s annual objective.
Gross domestic product expanded 4.3% year-on-year in the three months through June, falling short of Beijing’s official 4.5% target. The shortfall has galvanized domestic policy analysts to call for stepped-up government support to revitalize domestic demand, stabilize property investment, and safeguard annual expansion targets.
Sticky Inflation Tests Europe
In Europe, unexpected price pressures added fresh fuel to the monetary tightening debate:
- Spanish Inflation: Consumer price growth in Spain — one of the euro area’s primary engines of growth — unexpectedly accelerated to 5%, surprising forecasters and strengthening the argument for the European Central Bank to maintain a restrictive policy posture or consider additional rate hikes.
Japan Sells Debt to Avid Demand
In fixed-income markets, higher borrowing costs successfully drew investors back to Japanese sovereign debt:
- JGB Auction: The Ministry of Finance saw its government debt sale met with the strongest investor demand in six years, as elevated yields lured domestic and institutional buyers.
- Subscription: The offering was 3.0 times oversubscribed, well above the 12-month average bid-to-cover ratio of 2.67.
Market Wrap
Global equity markets traded mixed as financial shares offset broader macroeconomic headwinds:
- Equities: The Stoxx Europe 600 advanced 0.8%, propelled higher by banking stocks following the uptick in sovereign bond yields. In Asia, Tokyo’s Nikkei 225 dropped 1.5%, Hong Kong’s Hang Seng slid 0.5%, and mainland Chinese shares finished flat.
- Wall Street & Oil: US index futures pointed to an unchanged open, while Brent crude held steady around $105 a barrel.
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