ECB Fails to Ease.. Several Japanese and Chinese Indicators Reported
September 8, 2016
The dollar fell overnight by 0.6% against the Australian dollar, 0.5% relative to the euro, 0.3% versus the Swissie, and 0.1% vis-a-vis the yen, loonie and sterling. The yuan is steady.
Share prices around the Pacific Rim fell 0.7% in New Zealand and Australia and 0.3% in Japan but rose 0.6% in Hong Kong. In Europe, the British Ftse and Spanish Ibex are up 0.7% and 0.9%. Greek equities fell 1.0%, and the German Dax is 0.2% softer.
Ten-year sovereign debt yields rose 4 basis points in the U.K., three bps in Germany and a basis point in Japan.
West Texas Intermediate oil advanced 1.4% to $46.15 per barrel. Gold is 0.2% firmer at $1,351.60 per ounce.
The ECB Governing Council left its refinancing rate, marginal lending facility rate, and deposit rate at zero, +0.25% and negative 0.4%. The Bank retained a monthly EUR 80 billion amount of asset buying, which will continue at least through March 2017. There had been some hope that officials might have augmented stimulus at this time. President Draghi speaks shortly.
The National Bank of Serbia retained a 4.0% policy rate. It was cut by 25 basis points each in February and July of this year and is down from 8% in February 2015.
Japanese second quarter real GDP growth was revised to 0.7% at a seasonally adjusted annualized rate (SAAR) from 0.2% SAAR reported initially. Exports and business investment fell, while consumption remained meager. Public spending and inventories supported growth in the spring quarter. Real GDP was 0.8% greater than a year earlier. The GDP deflator rose 0.7% on year, and nominal GDP was 1.3% higher than in 2Q15.
Japan’s economy watchers index rose 0.5 points to 45.6, a 7-month higher but still well below the 50 threshold.
Japan’s current account surplus printed at JPY 1.938 trillion in July, 8% bigger than a year earlier. Merchandise imports tumbled 26.0% on year, surpassing a 15.7% drop in exports. The seasonally adjusted current account surplus of JPY 1.448 trillion undershot analyst expectations, however, and was smaller than June’s JPY 1.648 trillion surplus. Exports fell 2.7% on month, and imports dropped 0.9% from June’s total.
Japanese customs clearance trade deficit of JPY 64 billion in the first twenty days of August was considerably smaller than the year-earlier deficit of JPY 713 billion. Imports fell 18.7%, over four times more than the drop in exports.
Japanese bankruptcies spiked in August and were 14.9% greater than a year earlier.
Japanese bank lending was 2.0% greater in August than a year earlier, down from on-year growth of 2.1% in July and 2Q16 and 2.2% in the first quarter. Monetary stimulus hasn’t accelerated bank lending growth.
A member of the Bank of Japan Board, Nakaso, gave mixed signals, asserting that stimulus will not be reined in at the upcoming meeting but also conceding that negative interest rates can hurt financial market functionality.
Chinese imports recorded on-year positive growth in August for the first time this year. While exports slipped 2.8% on year, imports rose 1.5%, and the resulting trade surplus of $52.05 billion was only marginally smaller than the 6-month high of $52.3 billion registered in July.
Chinese international reserves shrank $15.9 billion in August to $3.185 trillion, their lowest level since late 2011. The People’s Bank of China has been selling foreign exchange to keep the yuan from sinking more rapidly.
On-year growth in foreign direct investment in China increased to 7.9% in August compared to a 4.3% on-year advance on average during the first seven months of this year.
In other news,
The Bank of France kept its forecast that French GDP is likely to rise 0.3% in the third quarter. Business sentiment during August in manufacturing and service-producing industries held steady at July’s level, whereas construction edged slightly higher.
Britain’s Royal Institute of Chartered Surveyors’ monthly house price balance index rose to 12% in August from 5% in July.
Greek unemployment in June of 23.4% was slightly less than 24.9% a year earlier.
GDP in Cyprus grew 0.7% last quarter and was 2.7% higher than a year earlier in the first half of 2016.
Turkish industrial production sank 4.9% on year in July.
Danish industrial output, on the other hand, recorded the largest monthly advance, 1.9%, since April 2008. Denmark had a DKK 12.1 billion current account surplus in July.
Dutch consumer prices edged up 0.1% on month and 0.2% on year in August. Irish consumer prices in the same month rose 0.2% from July and dipped 0.1% compared to August 2015. Hungarian consumer prices slid 0.4% on month and 0.1% on year.
Australia posted a A$ 2.41 billion goods and services trade deficit in July, down from A$ 3.25 billion in June but similar to May’s deficit of A$ 2.43 billion.
Canadian building permits, U.S. weekly jobless insurance claims, and U.S. monthly consumer credit get reported today. Peru also is holding a monetary policy meeting.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.