Ton of Released Data, Some with Unexpected Results

February 28, 2014

The yuan suffered its greatest single-day drop in almost seven years and hit a 10-month low against the dollar.

Yesterday’s testimony by Fed Chairwoman Yellen was somewhat more dovish than anticipated.  The dollar is down 0.8% against the Swiss franc and 0.6% weaker versus the euro after touching a 2014 low of $1.3814 earlier in the day.

The dollar also shows losses of 0.5% against the kiwi, 0.2% versus the yen and 0.1% against sterling.  It’s 0.1% firmer against the Aussie dollar and unchanged vis-a-vis the loonie.  Canada reports 4Q GDP at 13:30 GMT.

In equity trading, share prices advanced by 1.2% in China, 1.1% in Indonesia, 0.6% in India and Thailand, 0.5% in New Zealand, Taiwan and Singapore, 0.2% in Malaysia, and 0.1% in Singapore.  Stocks fell 0.6% in Japan and 0.1% in Australia.  They are also weaker in Europe, especially Spain (down 1.6%) but also Italy (0.4%), and London, Frankfurt and Zurich (each off 0.2%).  Italy’s MIB has lost 0.4%.

Gold and oil prices dipped by 0.2% and 0.1% to $1,324.60 per ounce and $102.27 per barrel.

Ten-year British gilt yields are three basis points higher.  The 10-year German bund edged up a basis point, and the 10-year Japanese JGB is steady.

Euroland CPI inflation held steady at 0.8% in February according to preliminary estimates.  This was the third 0.8% on-year increase in a row.  In the year to February 2013, consumer prices had risen by a much higher 1.8%.  Core CPi inflation rose 0.2 percentage points to a five-month high of 1.0%.

Euroland’s unemployment rate remained on a 12.0% plateau in January for a fourth straight month.  It also stood at 12.0% in January 2013.

A 2.5% jump in German retail sales volume was one of today’s biggest surprises.  The monthly increase was more than twice as great as forecast and completely reversed a 2.1% drop in December.  Sales volume had risen 1.0% in November.  January sales were 0.9% higher than a year earlier.

Another upside surprise came from a 1.7% 4Q-over-3Q rise in Swedish GDP that boosted the on-year increase fivefold to 3.1%.  GDP climbed 1.5% in 2013 as a whole.  Danish GDP dipped 0.5% last quarter and edged only 0.4% higher in 2013.  Polish GDP grew 0.6% in 4Q versus 3Q and was 2.2% higher than  in 4Q12.

French consumer spending produced a negative surprise, dropping 2.1% in January and 0.5% from a year earlier.  French producer prices fell 0.6% on month and 1.2% on year in January.

Spanish consumer prices in February were unchanged from a year earlier.  Italian consumer prices posted a 0.5% increase over the same statement year to February.  Italy’s jobless rate unexpectedly rose 0.2 percentage points to 12.9% in January.

Sweden experienced PPI inflation of only 0.2% in the year to January.  Icelandic producer prices plunged 12.3% between January 2013 and January 2014.  Greek producer prices edged up 0.1% on month but fell by 0.9% in the year to January. Greek retail sales were 6.1% lower in December than at the end of 2012.  Norwegian retail sales edged up 0.1% both on month and on year in January.

Many Japanese economic indicators were reported.  Because of the coming sales tax hike in April, the first quarter is seeing front-loaded activity.

  • The manufacturing purchasing managers index fell a two-month low of 55.5 in February from 56.6.  It has been above the 50 threshold between contraction and expansion since March 2013.
  • A 4.0% increase in industrial production last month was the greatest month-on-month increase since 2Q11.  Output exceeded the January 2013 total by a robust 10.6%.  Survey evidence suggests another increase in February but a drop in March.
  • Motor vehicle production was 14.5% greater than in January, accelerating from on-year growth in December of 12.2%.
  • Total retail sales went up 1.4% on month in January and by 4.4% on year, most in 21 months.  Large-store sales grew 0.1% on year.
  • Real household spending rose 1.1% on year in January despite declining income and jumped 1.6% on month.
  • Japan’s jobless rate held steady at 3.7% in January.  It’s the lowest level since October 2008.  Employment was 0.5% greater than in January 2013, and the job offers:seekers ratio edged higher to 1.04 from 1.03 in December and 1.00 in November.
  • Core CPI inflation stayed at 1.3% in January.  Total CPI inflation settled back to 1.4% from 1.6% in December.  Tokyo core CPI rose 0.2 percentage points to 0.9%. 
  • Housing starts recorded a smaller 12.3% year-over-year increase in January after and 18% December-over-December advance.
  • But growth in construction orders rebounded to 15.2% after on-year increases of 2.2% in November and 4.9% in December.

British consumer confidence printed in February at minus 7, the same reading as in January.  The Nationwide British house price index increased 0.6% in February and accelerated to a 12-month rise of 9.7% from 8.8% in January.

Building approvals in New Zealand, down 8.3% in January, recorded their largest monthly drop in ten months.  New Zealand business sentiment improved 6.7 points that month to a reading of 70.8.  On-year M3 money growth in January was 7.0% in New Zealand, a similar 6.8% in Australia, and 6.3% in South Africa. 

South Korean industrial production edged up 0.1% on month and fell 3.8% on year.  Retail sales increased by 2.4%.

Turkey’s trade deficit narrowed 6.8% on year to $6.82 billion in January. 

The balance of political power in Ukraine remains unsettled and confusing.

Scheduled U.S. data today include revised GDP, the U. Michigan index of consumer sentiment, pending home sales, and the Chicago and Milwaukee regional PMIs.  Kocherlakota, Evans, Plosser and Stein of the Federal Reserve speak publicly. today.  ECB President Draghi reiterated his view that he sees no deflation in the euro area as yet.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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