Wait and See Market Mood

March 23, 2017

After stocks sold off earlier this week, there’s been a pause this Thursday, as investors await the U.S. House of Representatives vote on the Republican Insurance Policy and the scheduled public comments of Fed Chair Yellen and Minneapolis Fed District President Kashkari, who dissented from this month’s federal funds rate hike. Wednesday’s terrorist act in London does not appear to be a factor on trading.

  • Share prices closed flat in Japan and Hong Kong, up 0.6% in India and 0.4% in Australia, but down 0.3% in New Zealand.
  • European equities have bounced up 0.9% in Greece, 0.6% in Italy, 0.5% in Spain, 0.4% in Germany and 0.2% in France. The British Ftse is flat.

The dollar remains at Wednesday’s closing levels against the yen, euro, Swiss franc and loonie. The dollar rose 0.6% and 0.4% against the Australian and New Zealand dollars. The Reserve Bank of New Zealand left its official cash rate unchanged at 1.75%. See review. The dollar fell 0.6% against the peso and 0.2% vis-a-vis sterling.

Comex gold dipped 0.2% to $1,250.8 per ounce but remains $50 an ounce higher than on March 15 when the Fed tightened policy. West Texas Intermediate crude oil is 0.5% firmer at $48.30 per barrel.

Ten-year German bund and British gilt yields edged up one and two basis points, while the 0.05% Japanese 10-year JGB yield is steady.

The Japanese government left its monthly economic assessment essentially unchanged, calling for moderate recovery, with pickups in consumption, exports, investment and industrial production and improving employment and corporate profitability. Consumer prices are flat. The spring wage awards were disappointing.

British retail sales volume rebounded 1.4% in February. However, the December-February level was 1.4% less than September-November’s mean, virtually assuring the first calendar quarter decline since 2013.

The CBI British distributive trades index held steady at a reading of +9 in March, above January’s negative 8 score but well below the readings in the fourth quarter of 2016.

German consumer confidence dipped to 9.8 in April from readings of 10.0 in March and 10.2. The latest score constitutes a four-month low. A preliminary estimate of Euroland consumer sentiment will be announced later today.

France’s overall business climate index dropped 3 points to a reading of 104 in March. So did the sub-index for manufacturing. Services matched February’s score, but construction like manufacturing deteriorated.

The ECB is doing a targeted longer term refinancing operation today.

The unemployment rates of Iceland (3.1%) and Poland (8.5%) in February were lower than January levels.

CPI inflation in Singapore stayed level at 0.6% in February.

The Filipino central bank did not change its 3.0% reverse repo rate or any of its other interest rates. The reverse repo rate has been 3% since September 2014.

U.S. data to be reported today include new home sales, the Kansas City Fed manufacturing index, and weekly jobless insurance claims.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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