Continuing Rush to Release Data Ahead of the Yearend Holidays

December 17, 2013

Typical of December, many countries are releasing data earlier in the month than is typical at other times of the year.  The same is true of central bank meetings.

Four central banks announced monetary  policy meeting decisions.

  • Swedish Riksbank:  Cut its repo rate by 25 basis points to 0.75%.  The decision was unanimous and expected.  Also lowered the future rate guidance for rates such that onset of increases is now not seen happening until 2015 versus late 2014 in prior statements.  Reduced inflation prognosis was the reason for the changes.
  • Central Bank of the Republic of Turkey:  Made no change in its key 4.5% repo rate just as analysts were predicting.  Inflation lies above target, precluding a more stimulative stance.  The overnight 3.5% borrowing and 7.75% lending rates were also left unchanged.
  • Czech National Bank:  Kept the two-week repo rate pinned at 0.05% and reaffirmed an exchange rate policy that was introduced at the prior November meeting.  Taking a page from the SNB playbook, Czech monetary officials vow to intervene however heavily to cap kurona appreciation at 27 per euro.
  • Magyar Nemzeti Bank reduced Hungary’s two-week repo rate by 20 basis points to 3.0%.  This expected move brings to a full percentage point the cumulative drop over the past four months.

Tomorrow sees highly awaited monetary policy decisions by the Federal Reserve and Reserve Bank of India.

Dollar movements overnight so far have been limited to rises of 0.3% against the Aussie dollar, 0.2% versus sterling, and 0.1% relative to the euro and Swiss franc and dips of 0.2% vis-a-vis the kiwi and 0.1% against the loonie.  The yen and yuan are unchanged against the greenback.

Share prices rose 1.4% in Indonesia, 2.0% in the Philippines, 0.8% in Japan, 0.7% in Malaysia, 0.5% in Taiwan and Singapore, and 0.3% in Australia.  Equities also dipped 0.5% in China and 0.2% in Hong Kong and India, and European markets are lower, too.  The Paris Cac has fallen 0.9%, while stocks in Britain, Germany and Italy are 0.3% softer.

Ten-year British gilt and Japanese JGB yields have slipped by two and one basis points, while the German bund is steady.

Gold and WTI crude oil prices are up 0.6% to $1,236.50 per ounce and 0.3% to $97.20 per barrel.

The German ZEW Institute’s December survey of investor sentiment revealed greater-than-anticipated improvement in psychology toward German and the whole euro area economies.  The German expectations index rose to a 92-month peak of 62.0 from 54.6 in November, 52.8 in November, 52.8 in October, 49.6 in September, 42.0 in August and just 36.3 at midyear.  The historical average reading for this series is 24.2.  Current conditions in Germany went ups 3.7 points to 32.4; such stood at 8.6 last June.  For Euroland, the expectations component printed in December at 68.3 versus 60.2 in November and 30.6 last June, while current conditions were at minus 54.4 after readings of -61.6 in November and -79.5 in June.

EU car sales were 1.2% greater than a year earlier in November.

Swiss officials look for 2.2% growth next year along with 0.3% CPI inflation.  Spain’s indices of leading and coincident economic indicators respectively rose 0.3% and held unchanged in October.

British inflation no longer looks excessive.  CPI inflation dipped a tenth of a percentage point to 2.1% in November with a sub-2% core rate of 1.8%.  RPI inflation held steady at 2.6%.  Producer output prices fell 0.2% on month and rose just 0.8% between November of 2012 and a year later.  Producer input prices fell 1.0% on year.  The core PPI-O and PPI-I rates were 0.7% and negative 0.9%.  The ONS reported that house price inflation accelerated by more than forecast to 5.5% from 3.8% in October.

The Confederation of British Industries’ monthly survey of industrial trends produced a one-point uptick to a reading of +12, best since March 2008.

Ezone inflation remained lower than what is truly safe for the region.  For a second straight month, prices fell 0.1% on a sequential monthly basis.  On-year total and core inflation in November was 0.9%, but that’s an average for all members.  Many had even less inflation including Greece (-2.9%), Portugal (+0.1%), Spain (0.3%), and Ireland (0.3%). The experience of other countries is that once deflation, or negative inflation, sets in, it becomes extremely difficult to eradicate.  The more Ezone members that slip into a deflationary state, the more exposed to a similar fate will become those members with positive inflation.

In more released price news, South Korean producer prices fell 0.2% on month and 0.9% on year in November.  Austrian CPI inflation held level at 1.4%.

The fairly new Australian Conservative government had some grim budget news to report.  Scrapping the prior government’s prediction of a restored surplus by fiscal 2016/17, Prime Minister Abbott’s government now envisages deficits continuing through FY 23/24.  Economic growth projected for next fiscal year was also cut by a half percentage point to 2.5%.  Minutes from the last Board meeting of the Reserve Bank of Australia do not rule out the possibility of another rate cut sometime in the future, but for now the stance is one of wait and observe.  New auto sales in Australia were 0.5% lower in November than a year before.  Australia’s index of leading economic indicators rose 0.5% in October, a better result than the dip of 0.1% in August and uptick of 0.3% in September.

On the geopolitical front overnight, Japanese Prime Minister Abe’s government escalated tensions with China over disputed islands by bringing more military hardware to the matter.

Scheduled U.S. data releases today feature the quarterly current account and monthly CPI and also include the National Association of Home Builders monthly housing market index and weekly chain store sales.  Canada’s monthly survey of manufacturing sales, inventories and orders also arrives.  So did yet more snow to America’s Northeast, and one has to wonder how much damage this weather is going to do to the 2013 holiday shopping season.

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

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