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Macro Update – 17th July 2015


Greece’s parliament backed a slew of fresh austerity measures demanded by the country’s creditors, clearing the way for talks to begin on a fresh €86bn bailout package to prevent the country crashing out of the Eurozone. Mario Draghi, head of the European Central Bank, affirmed his faith in Greece remaining in the euro as the central bank raised its limit on emergency loans to Greek banks by €900m. “The ECB continues to act on the assumption that Greece is and will remain a member of the euro area,” Mr Draghi said. The ECB move prompted Athens to signal that its banks, which have been shut for two weeks, would reopen on Monday but Capital controls will remain in place. Athens received further relief when EU officials finalised a plan to provide €7bn in bridge financing to save it from defaulting on an ECB loan due on 20th July.

Markets were focused on the timing of interest rate rises. Bank of England Governor Mark Carney and policy maker David Miles flagged the prospect of earlier-than- anticipated UK rate increases as the economy improves. Federal Reserve chair Janet Yellen on Thursday said the US jobs market had moved demonstrably closer to a more normal state, a reason why the central bank is likely to raise short-term interest rates later this year.

UK retail sales saw some of their strongest annual growth in the past two years last month, boosted by warm weather at the end of the month and an early start to summer sales, an industry body said on Tuesday.

China’s economy grew 7% year-on-year in the second quarter, slightly better than analysts’ forecasts.

The Bank of Japan refrained from increasing its monetary stimulus even as it trimmed its inflation outlook, as officials count on the economy pulling out of a soft patch and consumer price gains accelerating toward its target.

Martin Badder ACSI
Investment Manager

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