Quiet ahead of the Release of FOMC Minutes

July 9, 2014

The dollar was unchanged overnight against the euro, Swissie, and Australian dollar.  China’s yuan also shows no net change but was fixed at its firmest level since the first trading day of July.  The U.S. currency has risen 0.1% relative to the yen, loonie and sterling but dipped 0.2% vis-a-vis the kiwi.

Pacific Rim stock markets suffered a fourth straight down day, with losses of 1.6% in Hong Kong, 1.5% in China, 1.1% in Australia, 0.8% in New Zealand, 0.5% in India, 0.4% in Taiwan, 0.3% in South Korea, 0.2% in Singapore and 0.1% in Japan.  The equity scene in Europe has been more stable, however, with gains of 0.6% in Italy, 0.4% in Spain and 0.1% in Germany.  The French market is unchanged on net so far, and the British Ftse shows a loss of 0.4%.  Alcoa’s earnings, the first of the quarter, beat forecasts.

Japan’s 10-year JGB yield dipped a basis point to 0.54%.  That’s the lowest daily observation I show in fifteen months.  Ten-year German bund and British gilt yields are unchanged.

WTI oil is steady at $103.43 per barrel.  Comex gold advanced 0.6% to $1,323.80 per ounce.

Chinese CPI inflation settled back to a two-month benign low of 2.3%, as consumer prices dipped 0.1% between May and June.  Producer prices were 1.1% lower than in June 2013.  That’s the smallest on-year decline in at least a year, but the outcome was as expected.

Japanese M2 money growth slowed to 3.0% in June, lowest in over a year.  M2 rose 3.2% on year in 2Q, down from 4.0% in 1Q and 4.2% in the final quarter of 2013.  M1 money growth decelerated from 4.7% in May to 4.3% last month.  Broad liquidity posted a sub-3% advance of 2.8% in June.

Japanese machine tool orders increased 34.2% in the year to June down from a 48.7% on-year rise in May.

British shop price deflation accelerated to an on-year drop of 1.8% last month from a decline of 1.4% in the year to May.  A 0.6% monthly drop in the Halifax index of U.K. home prices was the largest decline in three months, but the index in 2Q was 8.8% higher than a year earlier.

Britain’s National Institute of Economic and Social Research estimates a robust 0.9% non-annualized increase in real GDP last quarter, up from 0.8% in 1Q.

Denmark’s current account surplus widened 50% on month to DKK 13.3 billion in May.

Consumer confidence in Australia recovered 1.9% in June, but the reading of 94.9 was nonetheless a disappointing one.

Czech consumer prices were unchanged in June from a year earlier after a 0.4% on-year increase in May.  Greece experienced more inflation than assumed in June.  The Greek CPI went up 0.6% on month and dropped 1.1% on year after a 2% on-year decline in May.

Brazilian CPI inflation accelerated 0.15 percentage points to 6.52% last month.

FOMC minutes from last month’s meeting are due at 18:00 GMT and will be combed for clues to the on-set of rising short-term U.S. interest rates and plans regarding management of the Federal Reserve’s balance sheet in 2015 and ensuing years.

ECB President Draghi speaks publicly today.  In contrast to his dovish rhetoric of late, the European Central Bank’s balance sheet has actually been shrinking recently.

Canadian housing starts get reported today.  U.S. mortgage applications advanced 1.9% last week, and the 30-year fixed mortgage rate climbed four basis points to 4.32%.

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

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