Soaking in Yellen Testimony and Awaiting U.S. Industrial Production

November 15, 2013

The dollar shows no overnight net change against the yuan, loonie and sterling.  The greenback is up 0.2% versus the Swiss franc and 0.1% relative to the euro but has fallen by 0.2% against the Australian and New Zealand dollars.

Janet Yellen’s confirmation hearing yesterday affirmed the likelihood of the existing pro-growth policy continuing.  The smart money in the market is betting on no tapering before March and a couple of years before the more serious move of raising the federal funds target.  Confirmation seems assured.

Stocks in the Pacific Rim rose following the Yellen hearings, with share price gains of 2.0% in China and Japan, 1.9% in South Korea, 1.7% in Hong Kong, 1.0% in India, 0.9% in Australia, 0.5% in Taiwan and 0.3% in Singapore, the Philippines and Malaysia.  But movements in Europe have been more subdued.  The British Ftse is 0.5% stronger, but Italian stocks are off 0.6%.  Gains in France, Germany and Spain so far are limited to 0.2% each.

There were some conflicting remarks on forex from Japanese officials overnight.  Finance Minister Aso said intervention is possible if trading becomes too uni-directional, but then Economics Minister Amari scolded Aso for breaking the taboo against commenting publicly on the yen by policymakers.

Chinese short-term money market rates climbed to their highest levels of November.

The 10-year JGB yield climbed two basis points to 0.61%.  Gilts are unchanged, and the 10-year German bund is a basis point firmer.

West Texas Intermediate crude oil is unchanged at $93.77 per barrel.  Gold dipped 0.3% to $1,282.40 per ounce.

Investors await a bunch of U.S. economic data releases today led by industrial production and capacity use.  Other reports will be on import prices, wholesale inventories, and the Empire State manufacturing index. Canada’s monthly survey of manufacturing sales, orders and inventories also arrives today.

The final estimate of Euroland CPI inflation in October showed a 0.1% dip from September and a 0.7% 12-month rate of increase, down from 1.1% in September and 2.5% in the year to October 2012.  Core inflation slowed to 0.8% from 1.5% in the year to October 2012.  Energy swung to an on-year decline of 1.7% from a rise of 8.0% in the prior twelve months.  Non-energy CPI inflation of 1.0% was down from 1.8% a year earlier.

There is a meeting of Euroland finance ministers today.  European and Asian data today were inconsequential.

Italy’s trade surplus narrowed 26% on month in September to EUR 794 million but widened six-fold on year.  Norway’s trade surplus of NOK 26.75 billion last month was 23% bigger than the surplus in September.  Spain’s index of leading economic indicators posted a larger 0.5% increase in September after rising 0.2% in August, but the index of coincident economic indicators fell by 0.3%.

Danish producer prices dropped 0.5% in October and recorded a 1.7% decline from a year earlier, similar to September’s 1.8% on-year decrease.  Austrian CPI inflation slowed to 1.4% last month from 1.7% in September, and Czech producer prices were unchanged from their October 2012 level.

Retail sales in Singapore fell short of expectations, rising 0.5% in September but recording a 5.9% drop from a year earlier.  Malaysian GDP increased 1.7% last quarter and 5.0% on year after a 4.4% rise between 2Q12 and 2Q13.  Hong Kong GDP growth slowed to a year-over-year 2.9% in 3Q from 3.2% in 2Q.  The Turkish jobless rate was 9.8% in August, a full percentage point greater than in the same month of 2012.

Today completes 7/8ths of 2013 and finds the dollar up 15.7% against the yen since December 31, 2012 but 1.9% softer vis-a-vis the euro.  The yen’s depreciation was compressed into the very early part of the year.

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

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