Waiting for the FOMC Statement and Some U.S. Data

May 1, 2013

Many markets around the world are closed today for Beltane and May Day celebrations.  These include China, Germany, France, Italy, Greece, Portugal, Spain, South Korea, India, Singapore, Thailand, Malaysia, Sri Lanka, Vietnam, the Philippines, Hong Kong and Taiwan.

The Federal Open Market Committee will release a statement at 14:00 EDT (18:00 GMT).  No press conference is scheduled afterward.  Analysts do not expect a policy change, but many think the statement could read more dovishly than the prior one.

Scheduled U.S. data releases today include the manufacturing purchasing managers survey, motor vehicle sales, the ADP estimate of private-sector employment, construction spending, and weekly oil inventories.

Meantime, the dollar is little changed, with upticks of 0.2% against the Australian dollar and 0.1% versus the yen and yuan but downticks of 0.2% against the euro, Swissie, and sterling and 0.1 relative to the loonie and kiwi.

Japan’s Nikkei closed down 0.4%.  Share prices fell 0.5% in Australia but rose 0.6% in New Zealand.  The British Ftse is 0.6% higher after upbeat remarks from a Bank of England official and a better-than-projected U.K. purchasing managers index in manufacturing.

The 10-year British gilt yield firmed a basis point, whereas the 10-year Japanese JGB edged a basis point lower.

Oil prices dropped 1.0% to $92.56 per barrel.  Gold eased 0.2% to $1469.00 per ounce.

Purchasing managers indices for manufacturing were reported for Britain, Ireland, the Netherlands, Denmark, Australia, China, and Indonesia.

  • The U.K. PMI unexpectedly edged closer to the 50 no-change threshold, printing 0.2 points higher at 49.8 in April.  Sub-indices for output and orders were above 50, and indications of inflationary pressure subsided.
  • The Irish PMI, 48.0, was the lowest level since September 2011 and down from 48.6 in March and 51.5 in February.  Production fell at the greatest pace since August 2009.
  • The Dutch PMI edged up 0.2 points to 48.2 but marked the third sub-50 outcome in a row.  In yet another disinflationary sign, input price inflation fell to a 9-month low.  Orders and production contracted.
  • Denmark’s manufacturing PMI sank beneath 50 to 49.5 from a downwardly revised 51.9 reading in March, which had been reported initially as 52.5.
  • Australia’s 36.7 PMI reading was a real shocker, falling from 44.4 in March.  Production printed at 33.1, down from 41.7.  The declines in orders and jobs also steepened very sharply.
  • China’s officially sanctioned CFLP PMI reading of 50.6 after 50.9 in March was unexpectedly lower but barely above 50 for a seventh straight time.
  • Indonesia’s PMI rose 0.4 points to print at 51.7.  Output price inflation quickened.  Production and jobs rose at a faster pace, but export orders grew more slowly.

Average cash earnings in Japan, a gauge of wage inflation, posted a second straight on-year decline, this time of 0.6% in March after dropping 0.8% in the year to February.  Japanese motor vehicle sales, which had been 15.6% weaker in March, posted an on-year rise of 2.0% in April.

Indonesian consumer price inflation slowed to 5.6% in April from 5.9% in March, thanks to a monthly dip of 0.1%.  Thai CPI inflation slowed to 2.4% from 2.7% in March.  South Korean CPI inflation edged down 0.1 percentage point to just 1.2% last month.  South Korea’s trade surplus narrowed 21% to $2.6 billion in April.  The Indonesian trade surplus narrowed 9% to $300 million in March. 

Australian new home sales rebounded 4.2% in March following a 5.3% drop in February, marking their fifth increase in six months.  The housing market has been helped by central bank easing in 2012.  Commodity prices in Australia fell in the year to April by 6.5% in SDR terms and 9.3% on a local currency basis.  Those declines were greater than ones in the year to March.

The debt rating of Slovenia has been cut two notches by Moody’s to Ba1.

Paul Tucker of the Bank of England expressed confidence that Britain’s economy has been better than the dismal statistics suggest and was hopeful about a gradual improvement in the future.  The Nationwide index of British house prices was weaker than expected, however, dipping 0.1% on month and rising just 0.9% on year in April.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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