Federal Reserve in the Spotlight
September 17, 2013
Even as the Federal Open Market Committee meets today for the first of a critical two-day policy meeting, a story has emerged that Janet Yellen, the present vice-chairperson, is now the front-running candidate to succeed Ben Bernanke as chair-person. Bernanke’s second 4-year term ends in late January.
In other central bank news,
- Minutes from the Reserve Bank of Australia’s meeting earlier this month, policymakers agreed to a Goldilocks stance, expressing satisfaction with the current policy settings but not ruling out a rate cut in the future should such a move be needed. The minutes also indicated a desire to see the Aussie dollar depreciate a little further and on the whole were dovish in tone.
- The Central Bank of Sri Lanka left the 7.0% repo rate and 9.0% reverse repo rate unchanged, as analysts were expecting.
- Turkey’s central bank officials are meeting today as well and likewise is not expected to change their key interest rates.
The U.S. dollar has slipped 0.4% against the kiwi, 0.3% versus the Aussie dollar, 0.2% relative to the euro and Swiss franc and 0.1% against the yen. The dollar is steady relative to Canada’s loonie, China’s yuan, and the British pound.
Japan’s Nikkei fell 0.7%. Share prices also dropped 2.1% in China, 0.4% in South Korea, 0.3% in Hong Kong and 0.1% in Taiwan and Indonesia. The Spanish IBEX, British Ftse, Paris Cac and German Dax show overnight losses so far of 0.7%, 0.4%, 0.3% and 0.2%.
Ten-year German bund and British gilt yields have risen two basis points each. The Japanese JGB is steady.
WTI crude oil fell another 0.5% to $106.08 per barrel. Gold edged up 0.1% to $1318.90 per ounce.
British consumer prices rose 0.4% on month in August, but the 12-month rate of increase slid a tenth percentage point to 2.7%. Core CPI inflation held steady at 2.0%. Total and core retail price inflation was 3.3%. According to the ONS, the formerly known DCLG index of housing prices rose 0.3% in July, lifting the 12-month rate of increase to 3.3% from 3.0%. British producer output price inflation slowed a half percentage point to 1.6% in August, and its core rate was only 1.0%. Producer input price inflation slumped to 2.8% from 5.1%, with core falling to 3.1% from 3.9% in July.
The ZEW Institute released its indices of investor sentiment toward Germany and the euro area, both of which rose more sharply in September than expected. The ZEW expectations index for Germany of 49.6 was 7.6 points higher than in August, more than twice as high as its long-term average score, and the best reading since April 2010, all of which led ZEW officials to conclude that investors still see the German recovery gaining momentum. The current situation reading of 30.6 showed a sharp jump from August’s 18.3 and June’s reading of 8.6. Euroland’s expectations index improved 14.6 points to 58.6, while the euro area’s current situation went up 14.4 points to negative 59.7.
Euroland’s seasonally adjusted current account surplus narrowed for a fourth straight month, reaching EUR 16.9 billion in July versus EUR 19.8 billion in June and EUR 24.2 billion in March. Over the 12 months to July, the unadjusted surplus of EUR 198.0 billion was substantially greater than EUR 75.0 billion in the year to July 2012. Euroland’s seasonally adjusted trade surplus of EUR 11.1 billion in July was a bit smaller than forecast and down from EUR 13.5 billion in both June and July. The year-to-date trade surplus of EUR 90.8 billion was 2.6 times greater than the surplus in the first seven months of 2012.
Australian motor vehicle sales increased 0.8% in August following a 3.6% drop in July. Sales were just 0.2% higher than a year earlier.
Chinese foreign direct investment slowed to a year-on-year gain of 6.37% in January-August from 7.10% in the first seven months of 2013. The Conference Board reported an increase in August of 0.7% in China’s leading economic indicators, their fifth month-on-month advance in a row. The index of coincident Chinese indicators went up 1.2% on month.
Producer prices in South Korea rose 0.3% last month but were 1.3% lower than in August 2012. Singapore’s trade surplus widened to SGD 3.68 billion last month. Hong Kong’s 3.3% jobless rate in August was unchanged from July.
Scheduled U.S. data to be released today are the consumer price index, the National Association of Home Builders housing index, and Treasury Department-compiled net capital flows. Canada’s monthly manufacturing survey is also due.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British consumer prices, Euroland current account, Zew Institute