Continuing Uncertainty Over U.S. Trade Policy and Response to Syria

April 13, 2018

Markets mostly marked time so far this Friday, confused by President Trump’s reinterest in the Trans Pacific Partnership and ambiguous tweet regarding the U.S. response to the Syrian government’s chemical attack. Investors now await reports on first-quarter corporate earnings.

The dollar was narrowly mixed overnight, firming 0.4% against the Swiss franc, 0.3% relative to the yen, 0.2% vis-a-vis the yuan and 0.1% versus the euro but edging down 0.4% against the kiwi, 0.3% relative to the peso, and 0.2% versus sterling.

In Asian stock market action, share prices climbed 0.9% in Singapore, 0.6% in Japan, 0.5% in South Korea, and 0.3% in India but fell 0.6% in Indonesia, 0.7% in China and 0.4% in Hong Kong. European equities strengthened, advancing so far by 0.9% in Spain, 0.8% in Greece, 0.7% in Germany, 0.4% in France and Italy and 0.3% in Switzerland.

There’s been scant net movement overnight in 10-year sovereign debt yields.

West Texas Intermediate oil slipped 0.3%, and Comex gold dipped 0.2%.

China recorded its first trade deficit, a shortfall of $5.0 billion in March, in 13 months. The data were distorted by the lunar new year, but a comfortable surplus had been projected by analysts nonetheless. Exports, which soared 44.5% on year in February, fell 2.7% in March. Import growth accelerated to 14.4% from 6.3%. China’s first-quarter trade surplus totaled $49.12 billion, some 23% narrower than a year earlier. Lest anyone think such might console U.S. President Trump, China’s bilateral first-quarter surplus with the United States widened a bit over 19%.

Bank lending and money growth in China last month also proved weaker than forecast. New yuan lending of CNY 1.12 trillion was at a 3-month low. On-year growth in M2 money slowed to a 3-month low of 8.2% from 8.8%, while M1 expanded 7.1%, down from 8.5%.

Euroland recorded a EUR 21.0 billion seasonally adjusted trade surplus in February. This 2-month high embodied on-month declines of 2.4% in exports and 3.1% in imports. The unadjusted surplus of EUR 18.9 billion was a bit smaller than forecast.

German CPI inflation data matched the preliminary estimate. Consumer prices in March rose 0.4% on month and 1.6%, a 2-month high, compared to March 2017. On-year CPI inflation over the past half year has ranged from a low of 1.4% in February to a high of 1.8% last November. Core CPI went up 0.5% on month and 1.6% on year.

In the year to March, consumer prices climbed 1.2% in Spain, 0.8% in Finland, and 1.3% in Poland, while edging 0.2% lower in Greece. Greek import prices in February were 3.0% higher than a year earlier.

Dutch retail sales in February were 2.0% higher than a year earlier after posting a 2.7% advance in January.

Central banks in Mexico and Peru left policy interest rate levels unchanged at 7.5% and 2.75%, respectively.

Singapore’s real GDP grew by 4.3% between the first quarters of 2017 and 2018. Aside from 5.5% on-year growth in the third quarter of last year, such was the strongest year-on-year pace since the final quarter of 2014.

The U. Michigan/Reuters consumer sentiment index and the U.S. Labor Department’s monthly JOLTS report, an examination of job hires and separations, get reported later today, as do Canadian existing home sales.

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

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