Dollar, Stocks and Bond Yields Mostly Lower

November 8, 2017

The dollar declined overnight by 0.5% against the yen, Aussie dollar and kiwi, 0.4% relative to the peso and loonie, 0.2% versus the yuan and 0.1% relative to the Swiss franc. The dollar’s unchanged against the euro and 0.4% stronger against sterling, which continues to be depressed by the fractious state of British politics and lack of progress in Brexit talks.

Ten-year sovereign debt yields are down 3 basis points in the U.K. and one basis point in the U.S. and Germany. The 10-year JGB is steady but at a mere 0.01%.

Equities fell 0.5% in India, 0.3% in Hong Kong, 0.2% in Indonesia and Taiwan and 0.1% in Japan and New Zealand. Stocks in Europe have fallen 0.8% in Italy, 0.4% in Spain, 0.3% in France and 0.1% in Germany and Britain.

Gold has firmed 0.4% to $1,281.20 per ounce. In a speech before the South Korean legislature, U.S. President Trump condemned North Korea and urged all nations to lend that country no support. West Texas Intermediate crude oil gave back 0.3%. Such had risen sharply in recent days amid Saudi Arabia’s purge of political rivals.

Democrats scored well in yesterday’s off-year elections, winning both of the governor races (in NJ and VA), as well as numerous local races that had been deemed close. The results are a symbolic vote of no confidence in President Trump and cast some doubt on the likelihood of getting the tax bill passed into law.

China’s trade surplus in October was $38.17 billion, just a tad below forecasts but almost $10 billion wider than in September. Compared to October 2016, exports rose 6.9% but imports soared 17.2%.

The Bank of Thailand left its policy rate at 1.5%, its level since a 25-basis point cut in April 2015. Today’s decision was taken unanimously, and 1.5% seems likely to prevail for quite some time longer.

The National Bank of Poland’s reference interest rate was kept unchanged at 1.5% as well where such has been since a 50-basis point cut in March 2015.

Japan’s index of leading economic indicators dropped 0.6 points to a 2-month low of 106.6 in September. The index of coincident economic indicators fell 1.9 points, erasing all but 0.1 point of August’s increase. Officials continuing to call the trend of this index “improving,” which has been the designation since October 2016.

Japanese international reserves decreased by $5.385 billion last month but are still $44 billion greater than the end-2016 level.

Germany’s five wise men, akin to the council of economic advisers there, revised upward forecasts of GDP growth this year and next to 2.0% and 2.2%, respectively.

France posted a EUR 9.0 billion current account deficit in the third quarter, a bit more than twice as much as the 2Q shortfall.

Spanish industrial production in September exceeded its year-earlier level by 3.4%. The on-year gain in Hungary’s industrial output that month was 8.1%.

Swedish household consumption rose 0.6% on month and 3.5% on year in September and recorded a 1.2% increase between 2Q and 3Q.

Industrial production and retail sales in Turkey respectively rose 10.4% and fell 1.2% in the year to September. The latter decline was the first on-year drop since April.

A policymaker at the Bank of Japan defended continuing the current very accommodative stance but did not call for any additional stimulus at this time.

Canadian housing starts and U.S. weekly oil inventory data get released today. President Trump has arrived in China where the handling of North Korea and Chinese trade policy will top his agenda.

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