Hold Your Fire! Hold Your Fire!

September 10, 2013

A diplomatic solution suggested by Russia appears to be shaping up that would avert a U.S. military strike on Syria.  Markets welcomed the development as well as news of better-than-forecast Chinese data.

  • Share prices increased 4.0% in Indonesia, 3.8% in India, 1.6% in the Philippines, 1.4% in China, 1.5% in Japan, 1.2% in Singapore and 1.0% in Malaysia, South Korea and Hong Kong.  In Europe, the German Dax, Spanish IBEX and Paris Cac are 1.8%, 1.5% and 1.4% higher, followed by gains of 0.8% and 0.5% in British and Italian stocks.
  • Emerging market currencies are doing better.  The dollar advanced 0.6% against the yen and is above the key 100 level.  The Aussie dollar climbed 0.5% against the U.S. currency, which otherwise shows minor dips of 0.3% versus the kiwi, 0.2% against the loonie and 0.1% vis-a-vis the yuran but upticks of 0.2% against the Swissie and 0.1% versus the euro.
  • Gold and oil prices fell by 1.0% and 0.8% to $1372.10 per ounce and $108.68 per barrel.
  • While the 10-year Japanese JGB yield is down three basis points, the 10-year British gilt and 10-year German bund are six and three bps higher.

Several Chinese economic indicators for the month of August were reported.

  • Industrial production recorded a 10.4% on-year increase, most since March 2012 and up from 9.7% in July and 8.9% in June.
  • Retail sales grew 13.4%, a seven-month high.
  • Fixed asset investment in January-August was 20.3% greater than a year earlier, accelerating from a 20.1% rise over the first seven months of the year.
  • New bank lending amounted to CNY 711.3 billion, up from a 699.9 billion yuan increase in July.
  • M2 money growth picked up to 14.7% from 14.5%.  M1 increased 9.9% in the year to August compared to a 9.7% rise in July.

Japanese machine tool orders recorded a considerably smaller 1.8% on-year drop in July than those of 12.2% in June and 23.6% in May.

Minutes from the Bank of Japan Board meeting in August expressed concern that fiscal reforms must be enacted if stably low interest rates are to be preserved.

Japan’s tertiary index of service-sector activity fell 0.4% in July and was 0.3% lower than the 2Q mean but 1.5% higher than in July 2012.

According to the National Australian Bank, Aussie business confidence jumped 9 points to a 27-month high of +6 in August.  Business conditions increased a pint to a reading of minus 6.  The news propelled the Aussie dollar to a six-month high of USD 0.9291.

Revised 2Q Italian national income accounts confirmed that GDP contracted 0.3% last quarter, their eighth drop in a row.  GDP was 2.1% smaller than in 2Q12.

French industrial production sank 0.6% in July, less than half as much as the decline in June.  Swedish industrial output slid 0.4% on month and 5.2% on year in July.  Industrial production in Finland rebounded 2% on month in July but showed a continuing decline (2.5%) compared to a year before.  Romanian industrial output edged down 0.1% in July, trimming the 12-month increase to 6.3%.

Britain’s Royal Institute of Chartered Surveyors’ house price balance index jumped from 36% in July to 40% last month, which was its best reading since 2006.

Norwegian CPI inflation edged up to 3.2% last month from 3.0% in July, but PPI inflation slowed to 2.4% from 3.0%.  Cypriot CPI inflation slowed to 0.1% in August from 0.7%.  Danish CPI inflation also slowed, printing at 0.4% last month after a 12-month rise of 0.6% in July.

Turkish GDP growth in the year to 2Q13 of 4.1% was higher than expected or than the 3.6% pace in the year to 1Q.  India’s trade deficit narrowed to $10.9 billion in August from $12.3 billion in July.  The South African current account deficit widened 13% on quarter to 216 billion rand in 2Q.

In Norwegian elections Monday, a Conservative-led coalition captured 96 of 169 seats in parliament, which was more than the incumbent Labor-led government of Prime Minister Stoltenberg, who presumably will be replaced by Solberg in the next government.

Small business sentiment in the United States, according to the NIFB index, ticked a tenth percentage point lower to 94.0 in August.  The Labor Department JOLTS index, a gauge of the pace of job hirings and departures, also gets released today.  Canada will be reporting housing starts.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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