According to FADA, automobile registrations rose by 34.1 per cent in July 2021 (22.6 per cent in June 2021 on YoY basis) on the back of calibrated reopening of the economy after Covid-19 induced lockdown. On a two year horizon, both passenger vehicles (24.3 per cent) and tractor registrations (48.3 per cent) saw a robust recovery. Within the PV segment, there has been a growing demand from the compact SUV segments. On the other hand, registrations for both CV and two-wheeler were down by 24.8 per cent and 19 per cent respectively, compared with the pre-pandemic levels.

PBOC in its quarterly monetary policy report reaffirmed that it will continue to maintain the current policy stance and ensure ample liquidity. However, the report highlighted risks to growth. Export growth is expected to slow down (owing to base effect) and investment growth is also expected to remain weak due to uneven recovery in the economy, especially in retail sectors and tourism. Inflation pressures are considered to be “temporary” and “controllable”, thus fuelling hopes of RRR cuts going forward (in October 2021 and January 2022).

Germany’s exports rose for the 13th straight month in June 2021 and were up by 1.3 per cent in June 2021 (est., 0.3 per cent) on a MoM basis versus rise of 0.4 per cent in May 2021. The stronger than expected growth comes despite persisting supply bottlenecks in manufacturing, thus raising hopes for a sharp rebound in growth. Imports moderated to 0.6 per cent in June 2021 versus an increase of 3.4% in May 2021. As a result, the trade surplus expanded to € 13.6bn from € 12.8bn in May 2021.

Markets

Bonds: Global yields closed mixed. US 10Y yield rose by 3bps (1.32 per cent) as labour data showed improvement and two of the Fed officials sounded hawkish. UK’s 10Y yield fell by 3bps (0.58%). Crude prices also fell by 2.3 per cent (US$ 69/bbl) over growing woes surrounding rising Covid-19 cases in the US, Australia and China. India’s 10Y yield fell a tad by 1bps (6.22 per cent). It is trading at 6.23 per cent today.

Currency: Except JPY (flat), other global currencies closed lower against the dollar. DXY rose by 0.2 per cent as US labour market data (JOLTS) remained upbeat. EUR depreciated by 0.2 per cent even as Germany’s exports rose more than expected in June 2021. INR depreciated by 0.2 per cent led by global cues. It is trading further lower today in line with other Asian currencies.

Equity: Global indices ended mixed. Investors monitored developments surrounding Covid-19 and falling commodity prices. Shanghai Comp (1.1 per cent) surged the most followed by Nikkei (0.3 per cent). Sensex (0.2 per cent) too ended in green led by strong gains in banking and technology stocks. It is trading higher today, while other Asian stocks are trading mixed.

[Inputs from Bank of Baroda]