Thursday Round-Up

March 8, 2018

The dollar rose against the euro, Swiss franc and sterling but closed little changed today on the yen.

Equities firmed, but commodities, Treasury yields, and other sovereign debt yields declined.

Trump imposed tariffs of 25% on steel and 10% on aluminum but with exemptions for now in the case of Nafta partners and flexibility in instances of key allies. With Gary Cohn returning to the private sector, more protectionist moves are all but certain ahead.

The European Central Bank Governing Council meeting decided to end today’s policy review with unchanged interest rates but removed the easing bias in its bond purchases. There’s no longer a threat that the program could be increased in size if needed. The current plan is to buy 30 billion euros of sovereign debt a month for another half year. Officials upgraded near-term growth prospects, but ECB President Draghi identified U.S. protectionism as a clearer and more present downside growth risk. It would also be an upside price risk.

Japanese GDP growth last quarter was revised upward from 0.5% at an annualized rate as estimated a month ago to a new figure of 1.6%. Such followed back-to-back gains of 2.4% in the middle two quarters of 2017 and left GDP 2.0% higher than in the final quarter of 2016.

Japan also reported the current account, bankruptcies, the economy watchers index and bank lending. January’s current account of 2.023 trillion yen seasonally adjusted and¬†JPY 607 billion unadjusted was much greater than forecast. There were 10.3% fewer bankruptcies in February than a year earlier. The economy watchers index in February dropped to a nine-month low, however, and on-year growth in bank lending was smaller last month than forecast or than in January.

China’s trade surplus widened to a 5-month high in February of $33.74 billion. Export growth of 44.5% was four times faster than forecast.

German industrial orders unexpectedly wiped out all of December’s 3% rise by plunging 3.9% in January but still managed to post a strong 8.2% on-year advance.

New U.S. jobless insurance claims rose 21K to 231K last week, which was 8K higher than its 4-week average.

Canadian housing starts rose nearly 15K last month to 229.7K.

In Serbia, a planned central bank policy review was postponed.

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

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