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IGM_Monthly_Interest_Rate_Outlook_-_August_2018.pdf

Please find attached the August 2018 edition of the IGM Monthly Interest Rate Outlook.

Highlights:

Synchronised global economic growth is, well, less off piste as far as the markets are concerned. Still, trade issues (we are not yet at 'War' status) run a significant risk of derailing what is now being considered as more of a blip than a nefarious downturn ... although if the Juncker-Trump 'deal' heralds a significant wind-down in tensions, and improved economic growth is the result � more/faster rate hikes might be on the cards. The US continues as the leading light on economic growth, ironic given Washington is the epicentre of the trade angst.

  • Elsewhere, reports the BoJ are to consider changing its Yield Curve Control policy are causing a stir in the rates markets (and some rare steepening), but Market Reporter Tian Yong Woon notes '�the Japan economy presently gives the CB only a few justifications for any near-term hawkish tweaks' although 'we may still see eventual "forced" policy changes amid increasingly cornered/distorted Japan ETF and JGB markets �' [Pages 2, 5]
  • The BoE is odds on to hike at its August 'Super Meeting', despite the softish recent data, Senior Editor/Analyst Marcus Dewsnap notes that 'Real rates do however remain extremely expansive, thus provide some cover for an increase.' And, 'look out for clues via inflation forecasts. The projections are probably more important for policy than current CPI.' [Pages 2, 5]
  • Elsewhere, events in Turkey attract attentions after an against consensus on hold decision, Emerging Markets Senior Analyst Natalie Rivett writes that this 'has confirmed fears of a weakening resolve to tighten monetary policy following President Erdogan's election victory last month that has already led to an erosion of central bank independence'. [Pages 3, 9].



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