Government of India has procured over 89mn metric tonne (+16% YoY) of paddy this year (a record high) in the ongoing Kharif marketing season

Macro developments

Government of India has procured over 89mn metric tonne (+16% YoY) of paddy this year (a record high) in the ongoing Kharif marketing season, as of 5 Sep 2021. This includes over 71.8mn metric tonne procured in Kharif sowing season and 17.1mn metric tonne procured in previous Rabi season. This is likely to benefit over 13mn farmers with the MSP value of Rs 1.68tn.

Japan’s annualised Q2CY21 GDP (final) has been revised upwards to 1.9% (QoQ) versus 1.3% as per preliminary estimate (PE) and 3.9% decline in Q1. The upward revision was driven by private non-residential investment (2.3% versus 1.7% PE) and government consumption (1.3% versus 0.5%). Private consumption was also revised marginally upwards to 0.9% from 0.8% earlier. Public investment on the other hand was revised downward to (-) 1.7% from (-) 1.5% earlier.

Industrial production in Germany bounced back to 1% in Jul’21 (est.: 0.8%) from a decline of 1% in Jun’21 on a MoM basis. This was led by higher production of capital (3.2%) and consumer (0.9%) goods. Separately, ZEW investors’ economic sentiment index declined for the fourth straight month to 26.5 in Sep’21 (est. 30.3), from 40.4 in Aug’21. Chip shortages in the automotive sector and scarcity of raw materials in the construction sector weighed on sentiments.

Markets

Bonds: Except Japan (lower), global yields closed higher supported by better macro print from China. Investors also await ECB decision amidst expectation of its unwinding of massive bond-buying program. US and Germany’s 10Y rose the most by 5bps each to 1.37% and (-) 0.32% respectively. Crude prices fell by 0.7% (US$ 72/bbl) owing to price cut by Saudi Arabia. India’s 10Y yield rose by 2bps (6.2%) amidst profit booking. It is trading at 6.19% today.

Currency: Global currencies closed lower against the dollar. DXY rose by 0.5% in line with the rise in US 10Y yield. EUR fell by 0.3% as Germany’s economic sentiment index was below expectation. AUD declined by 0.7% after RBA’s policy. INR depreciated by 0.4% even as oil prices eased. It is trading further lower today in line with other Asian currencies.

Equity: Global indices ended mixed as investors shifted their focus towards the upcoming ECB policy meet. Dow (0.8%) dropped the most, followed by Dax (0.6%). On the other hand, Asian indices ended higher. Sensex ended flat. Consumer durables stocks advanced the most, while real estate took a hit. However, it is trading lower today while other Asian stocks are trading mixed.