Crimea, Missing Malaysian Flight, and Lower Euro Area Inflation Top News

March 17, 2014

Over 95% of voting Crimeans signal desire to leave Ukraine.  Crimean parliament requests annexation by Russia.  Russian lawmakers to decide whether to do such.  Obama calls vote unlawful and threatens economic sanctions.

Malaysian Airlines Flight 370’s whereabouts still unknown, but best guess is in one of the deepest parts of the Indian Ocean.  Evidence now quite conclusive that plane was diverted on purpose, and main theory is that one of the pilots was the perpetrator.  U.S. officials critical over the weekend of Malaysian government’s handling of the search for the truth.

Final Ezone consumer price data for February revised on-year inflation rate down to 0.7% from a 12-month 0.8% increase reported initially.  The inflation rate had been 0.8% in both December and January.  Total consumer prices rose 0.3% last month from January’s level.  Core inflation posted gains of 0.5% on month and accelerated to a 12-month 1.0% pace from 0.8%, but note that officials at the European Central Bank, unlike those at many other central banks, target total inflation rather than some definition of core.  Inflation was 1.1 percentage points less than the 1.8% increase in the year to February 2013, with the energy component swinging from plus 3.9% in February 2013 to minus 2.3% in February 2014.

China’s central bank, the PBoC, doubled the allowable daily range of the yuan/dollar rate.  At one point after the announcement, which had been expected, the yuan touched an 11-month low of 6.1778 per dollar, but it currently shows a 0.2% net uptick.

Against other currencies, the U.S. dollar has declined by 0.5% against the the Australian and New Zealand dollars and 0.4% relative to the loonie.  All three are commodity-sensitive currencies that one would expect to perform well in these geopolitically risky times.  The U.S. currency also shows gains of 0.4% against the yen, 0.3% versus the Swiss franc and 0.1% relative to the euro and sterling.

Share prices in the Pacific Rim advanced 1.0% in China, 0.6% in Singapore and Malaysia, and 0.4% in South Korea but fell by 0.4% in Japan, 0.3% in Hong Kong, and 0.2% in Australia.  European equities have turned broadly upward after a difficult week, climbing so far by 1.2% in Madrid, 0.9% in Milan, 0.6% in Frankfurt, Zurich and Paris, and 0.4% in London. 

The yields on 10-year Japanese JGBs and German bunds are unchanged from Friday closing levels, whereas the 10-year British gilt firmed a basis point.

Gold ($1,379.60 per ounce) is steady, while West Texas Intermediate crude oil has slipped 0.3% to $98.60 per barrel.

Australian motor vehicle sales ticked 0.1% higher in February following a plunge of 4.0% in January and a 1.7% rise in December.  Vehicle sales were 3.5% lower than in February 2013. 

New Zealand’s service-sector purchasing managers index, known as the performance of services index, fell 0.7 points to a six-month low of 53.1 in February.  New Zealand consumer confidence, according to a measure compiled by Westpac Bank, improved this quarter to a nine-year high of 121.7 from readings of 120.1 in the fourth quarter and 115.4 in the third quarter of 2013.

Unemployment in Hong Kong remained steady and low at 3.1% last month.  Turkey’s jobless rate dipped 0.4 percentage points to 9.4% in December.

Austrian CPI inflation eased to 1.5% in February from 1.6% the month before.  Czech producer prices fell 0.7% in the year to February, same as in January.  Danish PPI inflation remained at 1.0% last month.

The Dutch current account surplus narrowed 1% between 3Q13 and the final quarter of last year, printing at a large EUR 14.42 billion nonetheless.  The Czech current account surplus swung to a larger-than-forecast CZK 25.9 billion surplus in January from a CZK 9.3 billion deficit in December.  The Norwegian trade surplus narrowed 32.1% on month to NOK 33.12 billion.

According to the Conference Board, growth in Spain’s index of leading economic indicators (+0.8%) outpaced the 0.2% uptick in the index of coincident economic indicators in January.  Both measures had fallen in December.

Four U.S. economic indicators get released today, led by industrial production & capacity usage and including the Empire State manufacturing index, the National Association of Home Builders index, and Treasury TIC statistics, which monitor capital flows between the United States and other countries.

Bundesbank President Weidmann, a monetary hawk, speaks publicly today, and Poland reports CPI, PPI and current account data.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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