China Stocks Up, OECD Growth Forecasts Revised, and U.S. and Eurozone CPI Data Released

September 16, 2015

A 5% jump in China’s stock market led equities higher overnight, with other gains amounting to 2.3% in Hong Kong, 2.0% in South Korea, 1.6% in Australia, 1.0% in India, 0.8% in Japan, 0.9% in Taiwan, and so far 1.5% in Spain, 1.0% in Italy, 2.1% in Greece, 0.7% in Germany, 0.8% in Switzerland, and 1.2% in France.  The Ftse is flat, however.

The OECD Interim Economic Outlook revised global GDP growth down to 3.0% this year and 3.6% in 2016.  Projected Brazilian growth in 2015 got revised down to -2.8% from -0.8%, and the new forecast for Brazil in 2016 sees a further contraction of 0.7% instead of a 1.1% increase.  Chinese growth is now seen at 6.7% in 2015 and 6.5% next year.  Growth in the U.S. was revised up to 2.4% in 2015 but down to 2.6% in 2016.  Japan is now projected to grow 0.6% this year and 1.2% in 2016, while growth in the eurozone is put at 1.6% followed by 1.9%.  Projected 2015 British and Canadian growth are put at 2.4% and 1.1%; the projections for 2016 are 2.3% and 2.1%.

U.S. consumer prices slipped 0.1% on month in August and posted the same 12-month increase of 0.2% as in July.  Core CPI rose 0.1% on month and, for the fifth time in six months, 1.8% on year.  Energy dropped 2.0% on month and 15.0% on year, while food prices increased 0.2% on month and 1.6% on year.  The overall 0.2% on-year CPI pace is down from 1.7% in the year to August 2014.

Eurozone consumer prices were unchanged on month in August, and their 12-month increase was revised to a 4-month low of 0.1% from 0.2% estimated initially.  Core inflation was also revised lower by 0.1 percentage point and now stands at 0.9%.  Energy fell 2.2% on month and 7.2% on year.  Total consumer prices had risen only 0.4% in the year to August 2014, so the inflation pace over the previous two years averaged about 0.25%, way below the target of below but close to 2.0%.  All this kind of makes the inflation-phobic Germans like Bundesbank Weidmann look pretty foolish.

The dollar is unchanged against the yen, kiwi and yuan.  The greenback edged up 0.1% overnight against the euro but fell by 0.4% versust the Aussie dollar, 0.3% relative to the Swiss franc and 0.2% against the loonie.  The largest drop was against sterling, which rose in response to news that wage inflation had risen to a 6-year high.  Total weekly earnings and their regular pay component each posted a 2.9% on-year advance in May-July.  An unexpected 1.2K increase in the claimant count of unemployed was also reported, as was a 5.5% ILO-basis jobless rate in the three months to July.

The 10-year British gilt yield is consequently six basis points higher today.  The comparable German bund yield rose two bps, while the Japanese JGB dipped one basis point.

West Texas Intermediate oil advanced 0.8% to $45.36 per barrel.  Comex gold edged 0.3% higher to $1,108.39 per ounce.

The Bank of Thailand’s one-day repo rate was left at 1.50% as expected.  It’s been at that level since two 25-bp cuts earlier this year in March and April.  With external factors turning weaker, central bank officials are prepared to cut the rate again if the economy stays weaker than hoped.

The Central Bank of Chile retained a 3.0% central bank rate but escalated its verbal protest of above-target inflation and signaled a likely rate hike before much longer.

New Zealand’s current account deficit on a seasonally adjusted basis equaled NZD 2.096 billion in the second quarter of 2015, 28.4% wider than the first-quarter shortfall.  The deficit of NZD 8.3 billion in the year between 2Q14 and 2Q15 equaled 3.5% of GDP.

Australia’s index of leading economic indicators according to Westpac’s measure fell 0.3% last month after an uptick of just 0.1% in July.

The final estimate of Japanese machine tool orders, a drop of 16.5% in the year to August, was unchanged from the preliminary indication and sharply worse than on-year increases of 1.7% in July, 11.8% in June and 15.0% in May.

Swiss investor sentiment according to the ZEW expectations index rose 3.8 points to 9.7 in September, an 18-month high.

Czech producer prices fell 3.7% in the year to August, while Austrian consumer prices in the same span rose 1.0%, down from a 1.2% on-year rise in July.  Core Polish CPI inflation held at 0.4% in August.

In the year to July, retail sales fell 3.5% in Brazil but rose 2.4% in South Africa.

Canadian manufacturing shipments in July were 2.8% lower than a year earlier.  Canadian GDP contracted in both quarter of the first half of 2015.

Other U.S. data arriving today are the National Association of Home Builders housing index and Treasury-compiled capital flows with the rest of the world.

The main event of this week, the FOMC press conference, is scheduled for tomorrow.  Inflation is ultra low in the United States and world, but is continuing zero interest rates after six years of economic expansion advisable?  That is the question.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

Tags: , , ,


Comments are closed.