Some Price Data and a Discouraging Remark from China
May 18, 2018
The dollar firmed overnight by 0.3% against sterling, 0.2% versus the yuan, yen and euro, and 0.1% relative to the loonie. The greenback fell 0.5% against the kiwi and 0.1% vis-a-vis the Swiss franc and is unchanged relative to the Australian dollar and peso.
Share prices in the Pacific Rim climbed 1.2% in China, 0.6% in New Zealand, 0.5% in South Korea and Hong Kong, and 0.4% in Japan but fell 0.9% in India and 0.6% in Indonesia. The German Dax and Paris Cac edged up 0.1%, while the British Ftse is trading 0.2% softer.
Italian financial markets are having another difficult day. The ten-year BTP yield jumped another 8 basis points and exerted upward tugs on other peripheral sovereign debt yields in the euro area such as in Portugal (+5 bps) and Greece (+3 bps). Italy’s stock market is down 1.0%, and Spain’s shows a loss of 0.5% so far. Politicians hoping to form a new Italian government seek to modify Italy’s relationship with its euro area partners.
10-year sovereign debt yields in the U.K., German and U.S. futures, by contrast, show declines of 2 basis points, 1 bp and 1 basis point.
Comex gold slipped 0.3%, while WTI oil is 0.1% firmer.
A state spokesman in China poured cold water on recent speculation that Beijing plans to agree to U.S. demands that it engineer an immediate and huge decline in its bilateral trade surplus with the United States.
Japanese total consumer prices fell 0.4% on month in April, cutting the 12-month rate of increase to 0.6% from 1.1% in March and 1.5% in February. Core inflation, which excludes only perishable food, fell 0.2 percentage points to 0.7%, and consumer prices (excluding both fresh food and energy) slipped back to 0.4% from 0.5% in the prior two months.
German producer price inflation edged up 0.1 percentage point to a 3-month high of 2.0% in April. Energy jumped 1.2% on month, while all other producer prices were collectively 0.2% higher in April than March. Likewise, German wholesale prices increased in April by 0.5% on month, thanks to a 3.1% upsurge in mineral fuels, and accelerated to a 1.4% 12-month rate of increase from 1.2% in each of the prior two months.
Czech producer prices wee unchanged in April from their year-earlier level.
Portuguese PPI inflation of 1.2% in April was a bit higher than March’s on-year pace of 1.0%.
Euroland’s seasonally adjusted current account surplus contracted EUR 4.8 billion to a 9-month low of EUR 32.0 billion in March despite a bigger merchandise trade surplus. Net investment income declined, while the outflow from transfer payments widened. The current account surplus over the twelve months through March equaled a hefty 3.6% of GDP versus 3.5% of GDP during the prior year through March 2017.
The Bank of Mexico left its overnight interbank interest rate unchanged at 7.5% after the latest policy review. Such was raised by 4.5 percentage points in a series of increases that began in December 2015 and, most recently, included a 25-bp hike this past February.
Canada reports on retail sales and consumer prices later today.
Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland current account, Japanese CPI, Sino-U.S. trade tensions
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