After FOMC Minutes, a Bunch of New Data Releases and ECB Minutes
May 21, 2015
FOMC minutes released late yesterday suggest that a June rate hike is possible but improbable.
Today’s release of ECB Governing Council minutes, known formally as the “ECB Account,” reflect determination to complete the entire program of quantitative easing scheduled to run through September 2016, satisfaction with how QE is working thus far, but continuing frustration over the extent of needed structural reforms.
The Bank of Japan’s Policy Board met today for the first of a two-day monthly meeting. Japanese stock and bond transactions generated a 1.624 trillion yen net capital outflow last week versus a 286 billion yen outflow in the prior week. Policy settings are expected to be left unchanged.
In contrast to faster-than-forecast 1Q Japanese GDP growth reported Wednesday, the March all-industry index fell 1.3%, three times greater than anticipated. This caused the 12-month rate of decline to double to 2.4%. In 1Q, the all industry index rose 0.3% on quarter but fell 1.8% on year. Construction and public administration posted quarterly declines of 1.2% and 1.1%, but industrial production and service sector activity rose 1.5% and 0.7%.
Japan’s manufacturing purchasing managers index advanced 1.0 point to a 3-month high of 50.9 in May. Output also grew at the fastest pace since May, orders strengthened, but the index for input prices printed at a 29-month low.
British retail sales volume advanced 1.2% both including and excluding auto fuel during April, and each measure recorded a solid 4.7% on-year gain. These results were considerably better than anticipated.
The dollar strengthened overnight by 0.2% against the Canadian and New Zealand dollars and by 0.1% versus Australia’s currency. The greenback is unchanged relative to the yen and yuan but down 0.8% against sterling and 0.3% each vis-a-vis the euro and Swiss franc.
West Texas Intermediate oil appreciated 1.1% to $59.74 per barrel. Comex gold edged 0.1% firmer to $1,209.40 per ounce.
The 10-year sovereign debt yields of Japan and Britain rose by 3 and 1 basis points, while the 10-year German bund fell 2 basis points.
In the Pacific Rim, share prices climbed 1.8% in China, 0.9% in Australia and 0.4% in Indonesia, but declines were recorded of 0.8% in South Korea, 0.2% in Hong Kong and 0.1% in India. Japan’s Nikkei closed unchanged. European markets have weakened by 0.4% in Germany, 0.6% in Italy, 0.3% in France and 0.2% in Greece and Spain.
Greece is running out of time to negotiate more aid and could default if a scheduled payment due the IMF on June 5 is missed.
HSBC reported a 0.2-point rise to 49.1 in China’s preliminary manufacturing purchasing managers index. The improvement was less than forecast and resulted in a sub-50 reading for the fifth time in six months. Sub-50 scores connote a contraction of activity. The production subindex of 48.4 represents a 13-month low.
Preliminary PMI results for May were announced also for the eurozone, Germany and France.
- Euroland’s composite PMI fell 0.5 points to a 3-month low of 53.4, which is still strong enough to suggest 2Q GDP growth of around 0.4%. But the reading was lower than forecast, and an 0.8-point decline in services to a 4-month low of 53.3 outweighed a 0.3-point rise in manufacturing to a 13-month high of 52.3. Orders growth weakened ominously, but job creation quickened to a multi-year high.
- The German composite PMI of 52.8, was 1.3 points below April’s score and at a 5-month low. Manufacturing (51.4) was at a 3-month low, and services fell to a 5-month trough. Cost pressures intensified.
- France’s composite PMI, 51.0 in May after 50.6 in April, was at a 2-month high. Manufacturing contracted at the slowest pace in a year, and services grew marginally faster than in April.
Euroland’s seasonally adjusted EUR 18.6 billion current account surplus in March was the smallest since last August and 32% narrower than the surplus in April. In the year through March, a EUR 236.7 billion current account surplus accrued, 26.7% wider than in the prior 12 months to March 2014.
Swiss M3 money growth slowed to an on-year advance of 1.4% in April from 2.3% in March. Dutch unemployment remained steady at 7.0% in April. Irish producer prices climbed 9.0% in the year to April but posted only a 0.1% monthly uptick. Italian wage inflation accelerated to 1.2% in April versus 1.0% in March and 1Q. Italy’s EUR 1.97 billion current account surplus in March was slightly more than triple the size of its year-earlier result.
The CBI’s monthly survey of British industrial trends weakened to a 7-month low in May, dropping six points to a reading of -5. Danish consumer confidence slid to a reading of 13.0 in May from 13.7 in April and 13.9 in March. Turkish consumer sentiment was also weaker than forecast in May and below April’s reading.
Wholesale turnover in South Africa rose 1.8% on month and 3.2% on year in March.
There were 274K new U.S. jobless insurance claims last week. Although 10K more than in the previous week, the 4-week moving average fell by 5.5K to just 266-1/4K.
Other U.S. data scheduled to be released today are the Philly Fed manufacturing index, existing home sales, the Conference Board’s index of leading economic indicators, and Markit Economic’s early estimate of the U.S. manufacturing PMI.
Copyright 2015, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: ECB Account, Japanese all-industry index, purchasing manager surveys