A Somewhat Calmer Session
May 19, 2017
In Europe, stocks have risen 0.8% in Switzerland and Spain, 0.7% in Italy, 0.6% in Greece, 0.5% in France, 0.4% in the U.K., and 0.3% in Germany. China’s market closed unchanged. Japan’s Nikkei rose 0.2%, and Australia’s bourse slipped 0.2%.
The erosion of the dollar’s external value continues. The euro climbed another 0.5%, capping its best week in a long time. Sterling is also 0.5% stronger, and the peso has risen 0.3%. The dollar is 0.1-0.2% lower relative to the yen, Swissie, kiwi and Aussie dollar.
Swiss National Bank President Jordan said the franc is still overvalued.
Cleveland Fed President Loretta Mester wants to see the Fed’s gradual tightening continue even though strengthening business sentiment hasn’t really translated into a revival of business capital spending yet. She and Minneapolis Fed President Kashkari disagree on how close the U.S. economy is to full employment.
Utah Representative Chaffetz, who as chair of the House Oversight Committee, is resigning effective midyear. He was to have played a key role in congressional investigations of Russia’s interference in last year’s election.
President Trump leaves today for his first major foreign trip. He will be in Saudi Arabia, Israel, Rome, Brussels for a Nato Summit and at the G7 leaders annual conference hosted by Italy in Sicily.
Ten-year sovereign debt yields rebounded three basis points in the U.K. and two bps in Germany. A higher U.S. Treasury yield is also indicated.
WTI oil is 1.2% firmer at nearly $50 per barrel. Copper appreciated, while gold is steady at $1,252.60 per ounce.
Late yesterday, the Bank of Mexico raised its key interest rate to 6.75% from 6.5%, whereas the Central Bank of Chile lowered its policy rate to 2.50% from 2.75%.
After posting a record EUR 37.8 billion surplus in February, the euro area current account slipped back to EUR 34.1 billion seasonally adjusted in March. The first quarter surplus of EUR 98.2 billion was 32.5% wider than that in the final quarter of 2016, and the cumulative 12-month surplus through March of EUR 364 billion equaled a hefty 3.4% of GDP.
German producer prices rose more than forecast in April, climbing 0.4% on month and to a 12-month increase of 3.4%. In the prior 12 months to April 2016, the PPI had fallen 3.1%. Over the latest 12 months, energy producer prices went up 4.6%, outpacing the composite of the other PPI items, which rose 2.8%.
Orders in the CBI survey in May of British industrial trends unexpectedly rebounded to a reading of nine from 4 in April.
Consumer confidence in both The Netherlands and Denmark was somewhat weaker in May than in April.
Malaysian GDP rose 1.8% sequentially last quarter, lifting the on-year pace of growth to 5.6% from 4.5%. Hong Kong posted a 3.2% jobless rate in April, same as in March, but wholesale turnover in Singapore was 5.0% below its year-earlier level in the first quarter.
Canadian retail sales and consumer price data will be reported today. St. Louis Fed President Bullard speaks publicly.
Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, Trump trip to Middle East and Europe