Beyond the Taper
December 19, 2013
In the wake of yesterday’s Federal Reserve “taper” initiative, the dollar is higher, the yen is softer, 10-year sovereign debt yields are up, U.S. share prices are holding onto most of their gains, European stocks have rallied, and perhaps most dramatically of all, gold has plunged another 3.3% and is below $1200 per ounce.
New five-year yen lows of 104.38 per dollar and 142.93 per euro were touched.
Besides a 0.3% advance against the yen, the dollar has risen 0.5% versus the Swiss franc, 0.6% against the kiwi, 0.2% relative to the euro, and 0.1% vis-a-vis the loonie and sterling. The Aussie dollar and yuan are unchanged.
The Dow and S&P are down 0.1% and 0.3% after a big post-Fed jump yesterday. Japan’s Nikkei advanced 1.7%, and Aussie share prices climbed 2.1%. Stocks also rose 0.9% in India, 0.7% in Taiwan, and 0.3% in Singapore but fell by 1.1% in China and Hong Kong. The PBoC withheld from a normal liquidity injection for a fifth straight session. European equities have risen by 1.8% in Spain, 1.5% in Italy, 1.4% in Germany, and 1.2% in France and Britain.
Ten-year Treasury and gilt yields are up 3 basis points each and above 2.90%. The 10-year German bund gained 2 basis points, and Japan’s JGB is a basis point firmer.
WTI crude oil firmed 0.5% to $98.24 per barrel. Gold is down sharply to $1,194.40 per ounce.
U.S. jobless claims data for last week produced some disappointment. New claims rose 10K and averaged 343.5K per week over the past four weeks compared to an average of 338.5K over the prior four weeks to November 16.
In other U.S. data released today,
- The Philly Fed manufacturing index rebounded by just 0.5 points to +7.0 in December after dropping to 6.5 in November from 19.8 in October and 22.3 in September.
- Existing home sales of 4.90 million were somewhat lower than anticipated and down 4.3% on October’s total.
- The Conference Board announced a strong 0.8% increase in the index of leading economic indicators for November. The coincident index went up 0.4%.
Japan’s all-industry index dipped 0.2% in October, mainly because of a 0.7% setback in services. The all-industry index was 0.2% higher than the 3Q average level and 1.9% above its level in October 2012. Japan’s index of leading economic indicators in October was revised down a tenth point to 109.8, still 0.7 points better than in September. Japanese department store sales were 2.4% higher than a year before in November, helped by a 3.9% advance in the Tokyo market. Japanese stock and bond transactions last week generated a 1.147 trillion net capital inflow versus a 161 billion net outflow in the previous week.
Euroland recorded its largest monthly current account so far in October, a surplus of EUR 21.8 billion in seasonally adjusted terms. The unadjusted current account surplus roughly doubled from EUR 104.5 billion in the twelve months to October 2012 to EUR 205.7 billion in the ensuing statement year.
British retail sales in November performed about as expected, rising 0.4% on month ex-auto and 0.3% overall. Those on-year increases were 2.3% and 2.0%.
Highlights among other European data released today showed 1) a 1.7% on-year advance in Irish GDP in 3Q but a EUR 3.3 billion current account deficit that quarter; 2) a 1.3% 12-month increase in Italian wages in November; 3) a 2-point rise to –16 in Dutch consumer confidence; and 4) a slightly narrower Swiss trade surplus of CHF 2.11 billion in November. Spanish auctions of 5-year and 10-year sovereign debt were well-bid.
New Zealand GDP growth accelerated to 1.4% in 3Q (3.5% year-on-year), thanks to strong dairy production. The New Zealand trade balance swung from a 173 million kiwi deficit in October to NZD 183 million in November.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, Japanese all-industry index, U.S. jobless claims