FOMC Minutes to Be Released Later Today

November 18, 2015

Meanwhile, more news emerged from Paris.  Police stormed a suburban house where the architect was believed to be staying.  Two dead, 7 arrested, 4 police injured in violent exchange.  Also, bomb threats were made against some Air France flights.

Share prices fell 1.0% in China, and the yuan strengthened somewhat.  There was a bit a encouraging Chinese economic news from the monthly property price index, which firmed 0.2% on month and 0.1% on year in October.  In Beijing and Shanghai, house prices were 6.5% and 10.9% above year-earlier levles.  September had seen an overall 0.9% on-year decline in property prices.

Awaiting FOMC minutes due at 19:00 GMT, the dollar is unchanged against the yen, loonie and sterling, down 0.2% relative to the euro and 0.1% vis-a-vis the kiwi and 0.1% firmer against the Swiss franc and Australian dollar.

Switzerland’s ZEW index of investor sentiment printed at a four-month low of zero in November after readings of 18.3 in October, 9.7 in September, and 5.9 in August.  One concern is the strong franc.  Swiss National Bank President Jordan today reaffirmed the central bank’s view that the currency remains overvalued and warned that officials are prepared to intervened in the Forex market.

Equities closed down 1.5% in India, 1.1% in Singapore and 0.9% in Taiwan.  Japan’s Nikkei-225 ticked 0.1% higher.  Stocks in Europe so far are down 0.9% in Spain and Italy, 0.7% in France, 0.5% in Germany and 0.2% in Great Britain.  A member of the ECB Governing Council, Mersch, denied evidence of negative economic fallout from the Paris killings by ISIS.  It’s really premature for such judgements and highly unlikely that such will be the case in the medium term.

West Texas Intermediate crude oil recovered 1.8% to $41.40 per barrel.  Comex gold is unchanged at $1,069.97 per troy ounce.

The 10-year sovereign debt yields of the U.K. and Germany are four and one basis points lower.  The JGB yield is steady.

U.S. mortgage applications last week rose 6.2% following a 1.3% drop in the prior week.  The 30-year fixed mortgage rate increased six basis points to 4.18%.

The U.S. Treasury released its monthly TIC report on capital flows into and out of the United States late Monday, showing a net $175.1 billion net outflow in the most comprehensive snap-shot that includes short-term as well as long-term capital movements in September.

Construction output in the eurozone fell 0.4% in September, the first monthly drop in three months.  That trimmed the 3Q-over-2Q rise to just 0.1%.  Construction fell by 1.7% in France, 2.2% in Portugal and 0.9% in Germany.  Construction last quarter was 0.9% below its year-earlier level.

Portuguese producer prices decreased 3.7% between October 2014 and last month.  Energy exerted a 3.8-percentage point negative impact on this change.

Australia’s labor cost index posted a quarterly 0.6% increase in 3Q, the fifth 0.6% rise in the past six reported months.  Overall wage costs remained 2.3% greater than a year earlier (a record low 2.1% in the case of private labor costs).

The Conference Board’s Australian index of leading economic indicators fell for the fourth time in the past five months, a dip of 0.1% in September from August.  The index dropped 0.9% compared to the level six months earlier.  The index of Australian coincident economic indicators went up 0.2%.  A separate index of leading economic indicators compiled by the Westpac-Melborne Institute firmed 0.1% in October.  That was the third 0.1% increase in four months surrounding a 0.3% drop recorded in August.

South African CPI inflation edged up 0.1 percentage point to 4.7% last month.  Core inflation slipped 0.1 percentage point to 5.2%.  South African retail sales reversed August’s 1.8% increase with a 1.9% decline in September, cutting the 12-month rate of increase from 4.0% to 2.7%.

Chilean GDP grew 2.2% between the third quarters of 2014 and 2015.  The IMF projects Mexican GDP growth will accelerate from around 2.25% this year to 2.5% in 2016.

Today’s main event will be the content of the October 28 FOMC minutes, which will be combed for clues to how predisposed the Committee was at that time to hiking the federal funds rate in December and for indications of the likely size and spacing of additional rate increases next year.  U.S. housing starts and building permits also get released today.  Dudley, Mester, Lockhart, and Kaplan are Fed officials speaking publicly today.

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

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