More Productive U.S. Budget Talks???

October 10, 2013

There were unconfirmed overnight press reports that budget negotiators were showing greater willingness to compromise on a temporary extension of the budget ceiling that would push the drop dead date a month or so past mid-October.  Meanwhile, the release of more scheduled U.S. data has been delayed.

Brazilian monetary authorities lifted the Selic interest rate by another 50 basis points to 9.5% in an anticipated action amid inflation worries.

The Bank of England left its monetary policy settings unchanged as expected.  The Asset Purchase Program limit stays at GBP 375 billion.

The Bank of Korea’s main interest rate was left unchanged at 2.5%, its level since a 25-basis point cut in May.

European share prices show gains so far of 1.9% in Madrid and Milan, 1.6% in Paris, 1.4% in Frankfurt and 1.1% in London.  These advances follow upward moves today of 1.1% in Japan, 0.9% in the Philippines, and 0.7% in Indonesia.  Stocks fell 1.0% in China, 0.4% in Taiwan and Hong Kong and 0.1% in South Korea and Australia.

The dollar rose overnight by 0.5% against the yen and kiwi but is barely changed against the euro, Swissie, sterling, yuan or loonie.

10-year sovereign debt yields climbed four, three, and one basis points in Britain, Germany and Japan.

Gold fell by 0.8% and back below the $1300 threshold to $1296.80 per ounce.  WTI crude oil is 0.4% higher at $102.02 per barrel.

Speaking at MIT, ECB President Draghi called the euro “irreversible” and boasted that Euroland since 1999 has done a better job than the U.S. of creating jobs and that it also has made greater strides in consolidating public finances than its rival.

Japanese core domestic private machinery orders in August jumped 5.4%, sufficiently exceeding expectations to warrant an assessment upgrade by officials.  Government orders surged 22.4%, while foreign machinery orders went up 2.4% on month.  Overall orders were 25.9% greater than a year earlier.

Japanese consumer confidence printed at a 4-month high of 45.4 in September after readings of 43.6 in July and 43.0 in August.  In the first week of the second half of Japan’s fiscal year, stock and bond transactions generated a JPY 2.499 trillion net capital inflow, as Japanese sold JPY 2.226 trillion of foreign bonds. 

Japan’s tertiary index, a gauge of service-sector activity, increased by a sharper-than-forecast 0.7% in August and was 0.8% stronger than in August 2012.  The tertiary index in July-August was 0.1% below its 2Q average level, however. Bank lending in Japan recorded on-year growth of 2.0% in each month of 3Q13.

There was good news and bad news in the September Australian labor market data.  The jobless rate unexpectedly fell 0.2 percentage points to 5.6%, the the reason from the decline was a further dip in the labor participation rate to a 7-year low of 64.9%.  Employment advanced 9.1K, best in three months but not enough to offset August’s drop of 10.2K workers.

India’s trade deficit, a problem that had weighed on the rupee, unexpectedly contracted 38.5% in September to a 30-month low of $6.7 billion.

Industrial production data were released in a number of countries.

  • Output dipped 0.3% on month in Italy in August and was 4.6% lower than a year earlier when adjusted for the different number of working days.
  • French industrial production went up just 0.2%, less than half as much as forecast, and was down 1.6% from August 2012.
  • Finnish IP dipped 0.1% on month and fell 1.5% from a year earlier in August.
  • Greek production was 7.2% weaker than in August 2012.
  • Malaysian production dropped 4.6% in August, cutting its 12-month increase to 2.3% from 7.6% over the year to July.
  • Romanian IP declined 1.0% on month but remained 5.6% greater than in August 2012.
  • Swedish production slumped 2.3% on month and 6.9% on year, sending the krona to a 4-month low against the euro.
  • South African output sank 3.6% on month and was just 0.2% higher than in August 2012.

Consumer price data released today highlighted subdued inflation.

  • Danish on-year CPI inflation was merely 0.5% in September after 0.4% in August.
  • Swedish CPI inflation remained at 0.1% last month.
  • Norwegian CPI inflation slowed to 2.6% from 3.3% in August.
  • Dutch inflation decelerated to 2.4% from 2.8%.
  • Consumer prices in Ireland were just 0.2% higher than in September 2012.
  • Romanian inflation was halved to 1.9% from 3.7% in August.

Greece’s jobless rate edged up 0.1 of a percentage point to 27.6% in July.  Romania’s trade deficit widened 12% to EUR 640 million in August.

Canadian house price data are due today.

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

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