Concerns about Western Growth and Chinese Money Markets
September 26, 2013
The dollar fell 0.6% against the kiwi overnight but is otherwise narrowly mixed with upticks of 0.2% against the euro and yen and 0.1% versus the Swiss franc and sterling but downticks against other commodity-sensitive currencies like the loonie (0.1%) and Aussie dollar (0.2%). China’s yuan held unchanged.
China’s central bank made another large liquidity injection. Chinese share prices fell 1.8% to a two-week low. In other bourses around the Pacific Basin, stocks dropped 1.2% in Taiwan and 0.4% in Singapore and Hong Kong but rose 1.2% in Japan, 0.5% in South Korea, and 0.4% in Australia.
Italy’s precarious political situation depressed Italian equities by 1.8%. Italian retail sales fell 0.3% to their lowest level since 2001 in July. Sales were 0.9% weaker than a year earlier. Other European stock markets also fell so far by 0.5% in Paris, 0.4% in Frankfurt and Madrid, and 0.2% in London.
The 10-year German bund and Japanese sovereign debt yields edged one basis point higher, while the 10-year British gilt fell by three basis points amid the release of slightly weaker-than-anticipated British data.
- On-year British GDP growth in 2Q was revised downward to 1.3% from 1.5% on softer consumption and investment than reported previously. GDP climbed 0.7% between 1Q and 2Q.
- Although the smallest deficit in five quarters, the current account shortfall last quarter of GBP 12.988 billion after GBP 21.765 billion in 1Q was not as low as the GBP 10.5 billion figure predicted by analysts.
The price of gold is steady at $1335.80 per ounce. The price of WTI crude oil ticked 0.1% higher to $102.80 per barrel.
Ezone monetary data remained weak in August but in line with expectations. M3 money posted on-year growth of 2.3% in both August and June-August. Loans to the private sector dropped 2.0% between August 2012 and the latest reported month, including a 3.8% slump in lending to non-financial firms and just a 0.1% rise in lending to households. Credit to the private sector also fell by 2.0% on year.
Investors were not encouraged by yesterday’s batch of U.S. data and remain confused about Fed policy, with some now not expecting quantitative easing reductions to start before March 2014. The fabricated fiscal showdown between the Democrats and Republicans is a mounting worry. More U.S. data releases will be perused today: revised 2Q GDP, August pending home sales, the September Kansas City Fed manufacturing survey, and weekly jobless insurance claims.
Taiwan’s central bank interest rate was left unchanged at 1.875%. The Czech National Bank is also expected to announced unchanged policy today.
Swedish producer prices were 2.5% lower than a year earlier in August. Iceland’s CPI rose 0.3% on month but decelerated to a 12-month 3.9% increase in September from 4.3% in August.
French consumer confidence as expected rose from 84 in August to a reading of 85 in September, which is a 7-month peak. Danish unemployment in August returned to June’s 4.4% from 4.5% in July. Sweden’s trade surplus of SEK 3.8 billion in August was similar to the July figure of SEK 3.9 billion.
Singapore reported weaker-than-forecast industrial production in August. Such fell 1.4% on month but rose 3.5% on year. Hong Kong’s August trade deficit of HKD 39.6 billion was 6.5% wider than in July.
The Kenyan mall shooting is apparently over.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: British current account, Ezone M3 money growth, French consumer confidence