Stocks Recover Further, While Bond Prices and Dollar Move Lower

February 15, 2018

Japan’s Nikkei jumped 1.5%. A number of other Asian markets (China, Taiwan, Hong Kong, and Singapore did not open because of the Lunar New Year holiday. Share prices in Europe are so far up today by 1.5% in France and Greece, 1.0% in Italy, 0.8% in Spain, 0.7% in Germany and 0.6% in the U.K..

Prices for sovereign debt continued to slide, boosting long-term yields. Yesterday’s CPI report showed more inflation than expected in January. U.S. PPI and industrial output figures get reported today. The 10-year Treasury yield firmed another 3 basis points to a 4-year high of 2.94% and 54 basis points higher than the end-2017 level. 10-year British gilt and German bund yields advanced by 5 and 4 basis points, respectively, widening premiums vis-a-vis Japanese JGB’s which remained very low at 0.06% on ten-year and unaffected by the global trend.

The yen strengthened 0.3% to 106.73 per dollar. Japanese Finance Minister Aso implied that recent forex conditions have not been disorderly and therefore do not warrant intervention to counter market forces. The dollar weakened even more overnight against the euro (0.6%), Swissie (0.5) and sterling (0.4%).  The greenback dropped 0.3% against the peso and 2% versus the kiwi. There was another U.S. school shooting incident yesterday, maintaining this week’s average of more than two per week. Seventeen people were killed in the latest rampage.

Among commodities, gold, oil and copper each saw a modest drop in price.

Australia’s jobless rate slipped back to 5.5% in January after a 0.2 percentage point rise to 5.6% in December. Jobs climbed 16K, but the labor participation rate edged lower.

An 11.9% decline in Japanese core private domestic machinery orders in December didn’t prevent such from posting a 4.0% rise in the fourth quarter and a 4.2% advance for 2017 as a whole. Government  orders for machinery dropped by 6.3% last quarter, and foreign orders edged only 0.1% higher. Reported revisions to December industrial production data were minuscule. Output went up 2.9% on month and 4.4% on year. Capacity usage climbed 2.8% on month and 2.1% on year. Industrial capacity was unchanged on month and rose only 0.1% in 2017 after calendar year dips of 0.3% in 2015 and 0.5% in 2016.

Euroland recorded a EUR 23.8 billion seasonally adjusted trade surplus in December, a 3-month high. But the 2017 surplus of EUR 238.1 billion was 27 billion euros smaller than that of 2016, reflecting a 50 billion euro increase in the negative energy component.

Bank Indonesia left its 7-day reverse repo rate unchanged at 4.25%, the level since a 25-basis point reduction last September.

Jobless rates were reported for Turkey of 10.3%, Sweden of 6.5%, France of 8.9%, and The Netherlands of 4.2%.

Indian wholesale price inflation dropped by a greater than expected 0.7 percentage points in January to 2.84%.

On-year CPI  inflation slowed to 0.6% in Spain, negative 0.2% in Greece, and +0.2% in Ireland. Danish producer prices in January were 1.4% higher than a year earlier.

Following the resignation of Jacob Zuma, who’d been president since 2009, South Africa’s parliament chose Cyril Ramaphosa to be the country’s next leader.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: , ,


Comments are closed.