Equities and Bond Yields Up… Dollar and Price of Oil Slip
February 19, 2021
Share prices advanced 0.7% in South Korea, 0.6% in China, and 0.5% in Indonesia. European markets and U.S. futures are up, too, but equities fell in Japan, Australia, New Zealand, and Singapore.
Ten-year sovereign debt yields today climbed 6 basis pints in the U.K., 3 bps in the U.S. and Germany and one basis point in Japan.
The trade-weighted dollar slackened 0.4% and is close to a 1-month low. In bilateral terms, the dollar has lost 0.4% against sterling, which strengthened above $1.4000 for the first time in 34 months. The dollar dropped somewhat more than 1.0% against the New Zealand and Aussie currencies, 0.4% versus the euro, 0.3% vis-a-vis the loonie and 0.2% against the yen.
The price of West Texas Intermediate crude oil, which crested above $62/barrel yesterday has fallen back below $60. Gold has dipped 0.2%, and the bitcoin levitated further into unchartered territory at $52,904.
Preliminary purchasing manager survey results released today provide an early look at the month of February. There is continuing evidence of supply chain disruptions, yet better-than-expected manufacturing has mitigated the blow to services from a need to tighten lockdowns.
- Japan’s composite PMI rose half a percentage point to a 2-month high of 47.6 as services fell to a 6-month low of 45.8, while factory activity went above the 50 no change threshold to a 26-month high of 50.6.
- In the euro area, manufacturing printed at a robust 57.7, a 3-year high, while services (44.7) fell to a 3-month low. The composite score of 48.1 was up 0.3 index points at 48.1.
- Germany’s composite PMI rose to a 2-month high of 51.3, whereas the French composite PMI sank 2.5 points to a 3-month low of 45.2. All in all, Euroland seems likely to record a second consecutive quarter of negative GDP growth, but jobs in manufacturing increased for the first time in nearly two years.
- Britain’s composite PMI rebounded sharply from 41.2 in January to 49.8 in February. In the first month of 2021, the U.K. economy was slammed by both the implementations and confusion of the post-Brexit rules and by Covid lockdowns. In separate British data releases today, retail sales volume in January plunged 8.2% on month, some three times worse than feared, and that resulted in a 5.9% year-on-year drop. But consumer confidence rose in February to an 11-month high, and the orders component of the monthly industrial trends survey rebounded 14 index points to a one-year high.
- Australia’s February composite PMI remained solidly above the 50 level that separates improvement from deterioration but nonetheless fell 1.5 points to a 4-month low of 54.7.
Japanese core consumer price inflation rose 0.4 percentage points in January to a 4-month high but at -0.6% remained below zero percent.
Australian producer prices rose 0.5% on quarter last October-December to post a smaller year-on-year decline of only 0.1%.
New Zealand producer output prices increased 0.4% last quarter and accelerated to a 12-month 1.5% rate of increase. producer input prices were unchanged compared to the prior quarter.
South Korean PPI inflation jumped 0.7 percentage points to a 1-year high of 0.8% in January, further underscoring the global nature of faster price increases in recent months. Some of this stems from base effects (prices were dropping sharply a year ago), and part reflects higher commodity prices.
German producer prices shot up 1.4% on month in January and recorded the largest year-on-year advance (1.5%) since July 2019.
French consumer prices confirmed the preliminary estimates for January, a 0.2% uptick from December and a 6-month high in the year-on-year pace to +0.6%.
Italian CPI data for January were revised higher to now show increases of 0.7% on month and 0.4%, a 1-year high, in the comparison with the same month a year earlier.
Swiss industrial production last quarter was 3.8% lower than a year earlier.
Euroland’s seasonally adjusted current account surplus in December of EUR 36.7 billion was 46% larger than in November. The full-2020 surplus of EUR 257 billion was EUR 17 billion smaller than in 2019 but expressed as a percent of GDP remained at 2.3%.
Spain’s trade deficit narrowed sharply to EUR 13.4 billion last year from EUR 31.5 billion in 2019.
Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British retail sales and consumer confidence, Euroland 2020 current account surplus, preliminary February PMI results
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