Budget Deal Not Finalized Yet

October 11, 2013

A meeting between congressional republicans and President Obama ended yesterday without a finalized extension of the debt ceiling.

In overnight trading,

  • Equities advanced by 1.6% in Australia and China, 1.5% in Japan, 1.3% in India, 1.2% in Hong Kong and South Korea, 0.8% in the Philippines and 0.5% in New Zealand.
  • European stocks, by comparison, are more narrowly mixed with no net change so far in Milan or Paris, a 0.8% rise in London, a gain of just 0.3% in Frankfurt, and a drop of 0.3% in Madrid.
  • The dollar fell 0.8% against the kiwi, 0.4% versus the euro and Swiss franc, 0.3% relative to the Australian dollar, and 0.1% vis-a-vis the loonie.
  • The yen firmed 0.1%, while the yuan and sterling are steady against the dollar.
  • Commodities slid.  WTI crude oil is down 1.3% at $101.67 per barrel.  Gold is off 0.6% at $1288.80 per barrel.
  • The 10-year German bund yield dipped a basis point, while Japanese JGBs and British gilts are unchanged.

Monetary authorities left Peru’s central bank interest rate at 4.25%, its level since a 25-basis point increase in mid-May 2011.  The decision was expected.

Japanese M2 money posted on-year growth of 3.8% both in September and the third quarter, up from 2.5% in 2Q, 2.9% in 1Q and 2.5% in full-2012.  Growth in broad liquidity accelerated from 0.3% in 2012 to 3.7% in the latest reported month.  Domestic corporate goods prices in Japan increased 0.3% on month and 2.3% on year in September.  Export and import prices were 2.1% and 1.5% lower than in September 2012.

Food price inflation in New Zealand picked up in September to 1.2% from 0.3% in August.

German CPI inflation of 1.4% last month was the lowest since April.  Consumer prices were unchanged on month in both August and September.  Energy prices were 0.2% lower than in September 2012, while all other consumer prices recorded a 1.7% advance.

German wholesale prices recorded a 2.2% 12-month rate of decline, the most deflationary reading since November 2009, despite a 0.7% on-month increase.

Construction output in Britain dipped 0.1% on month but accelerated 1.3 percentage points to a 4.0% on-year increase.  The Conference Board reported a 1.2% jump in the U.K. index of leading economic indicators.  The index of coincident economic indicators was unchanged, however.

Spanish CPI inflation slowed appreciably to 0.3% in September.  Italian CPI inflation also moved below 1% to a reading of 0.9% that month.  Hungarian consumer prices climbed 0.5% on month and 1.4% on year in September.

The French current account deficit of EUR 3.1 billion in August was a shade less than in July.  The Turkish current account shortfall narrowed to $1.99 billion, a third as much in August as in July.  The Czech current account swung from a surplus in July to a deficit of CZK 14.2 billion in August.

Sweden’s rate of unemployment edged down to 4.6% last month from 4.7% a year before, while Turkey’s jobless rate climbed 0.4 percentage points to 10.1% in July.

Growth in Finnish retail sales slowed to 0.5% in the year to August from 2.0% on year in July.

Canadian labor statistics are due today.  There will be more postponed releases in the United States, but the U. Michigan/Reuters compilation of consumer sentiment should attract interest.  Consumer confidence was hit hard during the 2011 government shutdown.

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

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