Several Things to Focus Upon

October 24, 2013

The dollar is generally steady, stocks are mixed, and there have been some data surprises.

The dollar is unchanged against the Australian dollar and the yen, up 0.3% against the kiwi and 0.1% relative to the loonie, but down 0.2% against the euro and 0.1% vis-a-vis the yuan, Swiss franc and sterling.

Share prices rose 1.1% in Indonesia, 0.6% in Thailand, 0.5% in South Korea and 0.4% in Japan and Singapore.  European stocks are up 0.7% in Germany, 0.5% in Britain, 0.4% in Spain, 0.3% in France and 0.2% in Italy.  Equities fell 0.9% in New Zealand, 0.7% in China and Hong Kong, 0.8% in the Philippines, and 0.2% in India.

Ten-year British gilt and German bund yields are two and one basis points higher.  The Japanese JGB is steady.

The prices of WTI crude oil and gold firmed by 0.4% to $97.25 per barrel and 0.2% to $1336.00 per ounce.

Japan’s government again downgraded the assessment of exports, calling such “almost flat.”  Earlier assessments had been “showing movements of picking up” in August and then “upward trend recently moderating” in September.  The government’s assessment of the overall economy was not changed, however, and remains “on the way to recovering at a moderate pace.”

Japanese stock and bond transactions generated a JPY 1.075 trillion net outflow last week, twice as much as the JPY 543 billion outflow in the week of October 12.

China’s domestic money market remains a focus.  The People’s Bank of China again failed to inject liquidity, allowing the 1-week rate to jump almost a full percentage point and the 1-year rate to ascend to a six-week high.

Three other central banks made scheduled interest rate announcements.  Each kept policy unchanged.  All three decisions were as expected.

  • Norges Bank left Norway’s deposit rate at 1.5%.
  • The Swedish Riksbank retained a 1.0% repo rate and its prior likely future interest rate glide path.
  • Bangko Sentral ng Pilipinas maintained overnight lending and borrowing rates of 5.5% and 3.5%.

The HSBC flash purchasing managers index of Chinese manufacturing climbed to a seven-month high of 50.9 in October from 50.2.

Flash PMI reports for the euro area were not as good as anticipated but kept in train the view that a slow and fragile recovery persisted into the start of the fourth quarter.

  • Euroland’s composite PMI was at a 2-month low of 51.5, matching August’s score but down 0.7 points from September.  Manufacturing (a four-month low of 49.4 in October after 49.8 in September) was below the 50 no-change threshold for a twentieth straight time.  Services printed at a two-month trough of 50.9 after 52.2 in September and 50.7 in August.
  • The French composite PMI score of 50.1 in October connotes overall stagnation and was down from 50.5 in September.  Manufacturing (49.4) and services (50.2) posted respective 4- and 2-month lows.
  • The German composite PMI dipped 0.6 points to a 3-month low of 52.6 despite a 0.4-point uptick in manufacturing to a reading of 51.5.  Services slid 0.4 points to a 3-month low of 52.3.

Italian consumer confidence unexpectedly dropped to a reading of 97.3 this month from a score of 100.8 in September.  Italian wage inflation edged lower to 1.4% in September.

In the Czech Republic, both consumer confidence (up 0.8 points to minus 13.5) and business sentiment (7.0 after 5.1) improved in October.

The CBI index of British industrial trends tumbled back 13 points in October to a reading of minus 4, which was its weakest level since minus 12 in July.  Analysts were expected just a one-point dip.

Swedish producer prices climbed 0.7% on month in September, three times more than forecast, but the 12-month change remained in the red at minus 1.1%.  Finnish producer prices dropped 1.1% on year as well and posted a 0.2% monthly dip.  Finnish retail sales adjusted for inflation sank 1.6% between September 2012 and last month.  Spanish unemployment eased only a quarter of a percentage point from the prior quarter to a still-horrific 26.0% in 3Q13.

New Zealand’s trade deficit of NZD 199 million in September was only a sixth as much as the August deficit.  Analysts were predicting a considerably smaller improvement.  Hong Kong’s trade deficit widened 6.2% on month to HKD 42 billion in September.

A Deputy Governor of the Reserve Bank of Australia indicated satisfaction with the Aussie dollar’s depreciation and predicted a further drop in mining investment as a share of GDP. 

Scheduled U.S. data arriving today includes new home sales, the Kansas City manufacturing index, the Labor Department’s JOLTS index, a preliminary manufacturing PMI report from Markit Economics, and weekly jobless insurance claims.  Japanese consumer prices arrive tonight.  The German IFO business climate index is also due tomorrow.

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

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