After U.S. Pandemic Relief Package, There’s Been Little change in Dollar, U.S. Stock futures, or 10-Year Treasury Yield

December 22, 2020

The dollar shows no net overnight movement against the yen, Swiss franc or loonie. The greenback gained 0.4% against the kiwi, 0.3% versus the Aussie dollar and 0.2% relative to sterling but slipped 0.1% vis-a-vis the euro and Chinese yuan.

Ten-year U.S. Treasury, German bund and Japanese JGB yields remain unchanged. Their British counterpart rose two basis points overnight.

U.S. stock futures have barely changed. Asian equities had not been as fortunate, dropping 1.9% in China, 2.3% in Indonesia, 1.4% in Australia, 1.0% in Japan, and 0.7% in Singapore. European stock markets, however, have over-performed, rising so far by 1.1% in Germany and Italy, 1.0% in France and Spain but just 0.3% in Great Britain.

The price of West Texas Intermediate crude oil has slumped 1.3%, and that of gold is 0.2% lower.

British third-quarter GDP growth was revised up half a percentage point to 16.0%. That rebound followed flat growth in the final quarter of 2019 and drops of 3.0% in 1Q and 18.8% in the second quarter. GDP remains 8.6%  below its year earlier level, including a 19.2% plunge of business investment.

Britain’s current account deficit widened further last quarter to GBP 15.734 billion, equal to 2.9% of GDP. Also, public-sector net borrowing of GBP 31.6 billion in November was the third greatest monthly deficit ever, and the GBP 240.9 billion net borrowing so far this fiscal year (April-November) represents the largest fiscal eight-month shortfall ever recorded. Public-sector outstanding debt now equals 99.5% of GDP.

Swedish consumer confidence improved 4.2% in December to a 10-month high, but business sentiment dropped for a second consecutive month and to a 4-month low from an 8-month¬† high touched in October. Swedish retail sales increased 0.8% last month and set a 5-year higher in its year-on-year comparison of 5.7%. Swedish producer price inflation has hovered below zero percent for ten straight months, and November’s on-year drop of 4.4% was the largest since a slide of 4.6% in the year through August.

Analysts were expecting Australian retail sales to decline in November, but such instead leaped 7.0%, most in six months, and lifted the year-on-year advance to 13.2%.

Hong Kong experienced a record high quarterly current account surplus in 3Q of HKD 96.5 billion, equivalent to 13.8% of GDP.

Portugal’s current account surplus in October of EUR 422 million was nearly triple the size of its surplus a year earlier.

German consumer confidence has weakened to a 6-month low with a reading of -7.3. After sinking to -23.1 eight months ago, such had rallied to -0.2 but is now getting depressed by the resurgence of Covid infections.

Brazilian consumer sentiment slumped to a 6-month low in December for the same reason.

Irish wholesale prices dropped 2.8% on month and 10.7% on year. Singapore producer prices were flat on month and 0.3% lower than a year earlier in November.

U.S. real GDP growth in 3Q was revised 0.3 percentage point higher to a record 33.4%. That was still not enough to offset the first-half decline and left GDP 2.8% weaker than its third quarter 2019 level. The PCE price deflator was not changed in this revision, still slowing on-year increases of 1.2% overall and 1.4% on an underlying basis.

Other U.S. data on existing home sales, consumer confidence and manufacturing in the Richmond Federal Reserve District will be released later this morning.

Copyright 2020, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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