FOMC Not Expected to Change Policy at Today’s Meeting

October 30, 2013

The dollar is narrowly mixed with dips of 0.3% against the Aussie dollar, 0.2% versus the kiwi, and 0.1% relative to the euro, Swiss franc and sterling but upticks of 0.3% against the loonie and 0.1% versus the yuan and yen.

Share prices advanced 2.0% in Hong Kong, 1.5% in China, 1.2% in Japan, 0.8% in the Philippines, 0.7% in Singapore, 0.5% in Taiwan and India and 0.3% in New Zealand, Australia and Indonesia.  In Europe, equities are up 0.9% in Italy, 0.6% in France and Spain, 0.5% in Britain and 0.4% in Germany.

Ten-year British gilt and Japanese JGB yields have slipped by 0.3% and 0.2%.  German bunds are steady.

The price of WTI crude oil has eased 0.7% to $97.55 per ounce.  Gold firmed 0.4% to $1350.30 per troy ounce.

Japanese industrial production rebounded from a 0.9% August drop with a 1.5% increase in September, and officials upped their forecast for October’s gain to 4.7%.  More importantly, officials upgraded their industrial production assessment for the first time since March.

South Korean industrial production fell 2.1% in September and was 3.5% lower than its year-earlier level that month.  The South Korean index of leading economic indicators slid 0.2% in September, but business sentiment rose in November.

Chinese short-term market interest rates recorded another steep advance.  The seven-day repo rate hit its highest level in four months.

Euroland data released today are mixed.

  • The retail purchasing managers index fell 0.9 points to a five-month low of 47.7.  Germany’s reading of 52.1, down 1.3 points, also constituted a 5-month low, and the French and Italian retail PMI scores of 48.2 and 40.3 were below 50 and thus signaling a contraction of consumer activity.
  • Ezone business sentiment increased 0.9 points in October to a higher-than-forecast reading of 97.8.  Six months earlier, such stood at 88.6 in April.  Consumer sentiment was 0.4 points higher at minus 14.5, matching its preliminary estimate.  Industrial sector confidence rose 1.8 points to minus 4.8, but service sector confidence worsened 0.5 points to minus 3.7.  Construction confidence was also weaker in October than September. 
  • Euroland’s business climate index of -0.01 was 0.18 points higher in October than the September score and the best result since February 2012.

German CPI inflation fell in October in North Rhine Westphalia, Bavaria, Hesse, Brandenburg, and Saxony.  The average inflation rate in those five states was 1.1%, 0.2 percentage points less than in September.

German unemployment increased for a third straight month in October, but the 2K advance was smaller than those of 7K in August and 24K in September.  The unemployment rate of 6.9% was unadjusted.  The ILO-basis jobless rate edged 0.1 percentage point lower to 5.2% in September.  Employment in the third quarter was 0.6% higher than a year earlier, the same gain as between 2Q12 and 2Q13.

Two Swiss statistics were reported today:  The UBS consumption indicators improved 0.24 points to 1.56 in September, and the KOF index of leading economic indicators rose 0.18 points to a 13-month high of 1.72.

Dutch producer prices were 3.2% lower in September than a year before.  Spanish harmonized consumer prices were 0.1% higher in October than a year earlier.  Austrian producer prices fell 1.1% between September 2012 and September 2013. 

Austria’s manufacturing purchasing managers index printed at a 28-month high of 52.7 in October, 1.6 points above its September reading.

Spanish GDP ticked 0.1% higher last quarter, the first quarterly increase since 2Q11, but was 1.2% weaker than a year earlier.

Norwegian retail sales grew 0.7% in September and 1.5% from a year earlier.  Norwegian joblessness averaged 3.5% in June-August.  Industrial production in Cyprus was 8.8% lower in August than a year before.  Portuguese industrial production and retail sales were respectively 1.3% above and 2.1% below their year-earlier levels in September.

Australian new home sales climbed 6.4% on month in September, the biggest gain in 17 months.  A report surfaced that Moody’s had considered cutting its New Zealand sovereign debt rating last month to AA but didn’t do so.  Turkish consumer confidence rose 3.4 points to a score of 75.5 in October.

Brazilian producer prices were 5.3% higher in October than a year earlier.

U.S. mortgage applications rebounded 6.4% last week as the 30-year fixed mortgage rate fell six basis points to 4.33%.  Other U.S. data to be released today will be the ADP estimate of private jobs growth and consumer prices.  The main event today, however, is the FOMC decision at 14:00 EDT (18:00 GMT).  No press conference is scheduled.  Central bank decisions are due on Thursday from the Reserve Bank of Australia and the Bank of Japan.  The latter releases a semi-annual report on the outlook for growth and inflation.

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

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