RBI reported that currency in circulation (CIC) declined by Rs 64 billion and stood at Rs 29.5 trillion for the week ending August 20, 2021. Reserve money rose by 16.7 per cent on a year-on-year basis, compared with 15 per cent last year. On an FYTD basis, reserve money increased by 3.5 per cent against a 5.4 per cent increase, a year ago.

US durable goods orders fell by 0.1 per cent in July 2021 (est. -0.3 per cent) compared with an increase of 0.8 per cent in June 2021 on a MoM basis. This was led by a 2.2 per cent decline in transport equipment versus an increase of 1.4 per cent in June 2021. Orders for core capital goods were flat (0 per cent) in July 2021 (est. 0.5 per cent) following an increase of 1 per cent in June 2021. This was attributed to supply chain bottlenecks and shift in demand towards services.

Central Bank of Korea (BoK) increased its policy rate by 25bps to 0.75 per cent in its latest meeting, a first in nearly 3 years. It informed that the decision was not unanimous and some members argued to keep rates steady given rising Covid-19 cases. However, rising inflation, a surge in home prices, and household debt necessitated the increase in the policy rate. While the inflation forecast was revised upward to 2.1 per cent (2 per cent target of the Central Bank), the growth forecast was left unchanged at 4 per cent for CY21.

Markets

Bonds: Except for China (stable), global yields closed higher. UK’s 10Y yield rose the most by 6bps (0.6 per cent) supported by the sharpest increase in spending in 7-years by UK retailers. US 10Y yield rose by 5bps (1.34 per cent) ahead of the Jackson Hole meeting. Crude prices rose by 1.7 per cent (US dollar 72/bbl) supported by falling Covid-19 cases in China. India’s 10Y yield fell by 1bps (6.24 per cent) supported by Governor’s comments.

Currency: Global currencies closed mixed. DXY fell by 0.1 per cent on the back of improvement in risk sentiment as concerns over the Delta variant faded. JPY also fell by 0.3 per cent. On the other hand, AUD, GBP, and EUR gained. The rupee depreciated by 0.1 per cent as oil prices rose. It is trading further lower today in line with other Asian currencies.

Equity: Global indices ended mixed as investors turned their focus towards the upcoming Jackson Hole meeting scheduled later today. Amongst other indices, while Shanghai Comp surged by 0.7 per cent, Dax (0.3 per cent) ended in the red. After scaling fresh-all time high, Sensex ended flat with power and oil and gas stocks inching up further. It is trading higher today, while Asian stocks are trading lower.