U.S. Debt Talks Still Stalemated

October 7, 2013

Odds of a U.S. debt default are seemingly rising as the Tea Party wing of the House Republicans and the Democratically-controlled White House and Senate remain unflinching in their refusal to budge on the debt talks.  The government seems sure to stay partially shut through at least October 17. 

Share prices weakened around the world in response, falling 1.2% in Japan, 0.9% in Australia, 0.4% in Taiwan, and 0.3% in Indonesia.  In Europe, stocks have so far lost 1.0% in Paris, 1.1% in Frankfurt, 0.9% in London and 0.8% in Madrid.

China observed the final day of its week-long National Holiday. 

Commodity-sensitive currencies like the loonie and kiwi, each off 0.3% relative to the greenback have lost some ground.  Otherwise, the U.S. currency has faltered 0.5% against the Swiss franc and Japanese yen, 0.4% relative to sterling and 0.2% vis-a-vis the euro.  The yuan is steady, and the Aussie dollar has edged 0.1% lower.

Ten-year German bund and British gilt yields slipped by three basis points.  The Japanese JGB is steady.

The price of WTI crude oil is down 1.1% at $102.72 per barrel. Gold rose 0.2% to $1311.80 per ounce.

The U.S. isn’t releasing data to lend trading leadership, and there hasn’t been much data news from other countries, either.

Japan’s index of leading economic indicators dropped to a six-month low in August, printing 1.4 points lower at 106.5.  The index of coincident indicators edged down 0.1 points to a 2–month low of 107.6, and the lagging index of 112.8 was unchanged on month.

Japanese international reserves advanced by $19.242 billion in September and $34.733 billion in 3Q to $1.2724 trillion.

Australia’s construction purchasing managers index leaped 3.9 points to a 40-month high of 47.6 in September.

The Sentix gauge of investor sentiment toward the euro area settled back 0.4 points to +6.1 in October, over two points less than analyst expectations.  In September, the Sentix had jumped by 11.3 points.

The World Bank revised projected East Asian growth downward to 7.1% this year and 7.2% in 2014.  Growth this year in China was revised lower to a forecast of 7.5%.

Norwegian industrial output sank 3.8% on month and 4.4% on year in August, more than reversing gains recorded in July. Czech industrial production also rose on month in August but posted a smaller 12-month increase of 1.6%.  The Czech trade surplus narrowed 26% on month to CZK 20.59 billion in August.  Danish Industrial output fell 1.6% on month and by 3.6% on year in August.  Romanian GDP grew 0.5% between 1Q and 2Q and was 1.5% higher than a year earlier.

U.S. consumer credit, which is compiled by the Federal Reserve, and Canadian building permits will be released today.

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

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