More Weak Data around the Globe

August 16, 2019

New Zealand’s manufacturing purchasing managers index fell below the neutral threshold of “50” for the first time since September 2012, with a reading of 48.2 in July after 51.1 in June.

U.S. housing starts dropped 4.0% in July to a 5-month low of 1,191 million units. This was only 0.6% greater than in July 2018.

Real GDP growth in Hong Kong last quarter was revised downward to 0.5% year-on-year, a 119-quarter low. Business investment in machinery and equipment slumped 12.4%, while that in construction declined 10.6%. Trade flows contracted, too, hit by civil unrest as well as the U.S.-Sino dispute.

Euroland’s seasonally adjusted trade surplus fell EUR 2.0 billion between May and June to EUR 17.9 billion, as exports (-0.6%) fell for the second time in three months. The unadjusted EUR 102.2 billion surplus in the first half was only 1.3% smaller than a year earlier.

Turkish industrial production sank 3.7% between May and June and was 3.9% lower than a year earlier.

Czech producer price inflation eased to a 14-month low of 2.1% in July from 2.5% in June, 3.8% in May and 4.3% in April.

Among key dollar relationships, overnight movements range from gains of 0.5% against the euro, 0.4% versus the Swiss franc, 0.3% relative to the kiwi and yen and 0.1% vis-a-vis the Chinese yuan to losses of 0.5% against sterling, 0.4% versus the peso, 0.2% relative to the loonie and 0.1% against the Australian dollar.

Equity markets in the Pacific Rim rose 0.9% in Hong Kong and Taiwan, 0.5% in Indonesia, 0.3% in China and 0.1% in Japan but fell by 0.6% in South Korea, 0.5% in New Zealand, and 0.4% in Singapore. European markets are up 1.2% in Spain, 1.1% in Italy, 1.0% in France and Switzerland, 0.9% in Germany but just 0.5% in the U.K.. With that momentum, U.S. stocks opened up almost 1% higher, too.

Ten-year sovereign debt yields climbed four basis points today in the U.K. and one basis point so far in the U.S. but slide a basis point in Germany and stayed flat in Japan.

Among commodities, the prices of WTI oil and Comex gold diverged with the former rising 0.7% and the later slipping 0.7%.

The Bank of Mexico became the latest central bank to shift direction in the face of a deteriorating world economic outlook. A 25-basis point cut of Mexico’s overnight interbank rate to 8.0% was its first reduction since June 2014. The previous change, a hike of 25 basis points, had been done last December. Tightening amounted to a full percentage point in 2018, 150 basis points in 2017 and 250 basis points in 2016. In all, 15 rate increases were implemented from December 2015 through December 2018.

U.S. Treasury-compiled U.S. capital flows reported late Thursday revealed a sizable net long-term inflow of $99.1 billion in June but a combined long- and short-term inflow of just $1.7 billion.

Just In: U.S. consumer sentiment according to the Reuters/U. Michigan survey slumped unexpectedly to a 7-month low in August of 92.1 from a reading of 98.4 in July. 98.4 was also the average monthly reading over the five months from March through July.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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