Little Reaction to Unexpected Data Results

March 25, 2014

The German IFO Institute business climate index fell in March for the first time since October and by more than forecast.  Such printed at a two-month low of 110.7 after 111.3 in February.  While current conditions went up 0.8 points, business expectations fell 1.9 points to a 5-month low of 106.4.  The biggest adverse swing was a 4.1-point slide in construction to a 5-month low.  Wholesaling hit a 3-month low, and manufacturing dropped to a 2-month low. 

The German IFO services climate index sank 1.7 points to 19.2 in March, lower than its year-earlier reading of 20.4.  Like the business climate index, all of the deterioration was in expectations, while current conditions improved further.  The Russian seizure of Crimea weighted on sentiment.

Japan’s small business sentiment index compiled by Shoko Chukin Bank jumped 2.9 points to a 299-month high of 53.6 in March.

The Confederation of British Industries’ distributive trades index reversed February’s unexpectedly sharp improvement, falling back 24 points to +13 after readings of 34 in December, 14 in January and 37 in February.

British CPI inflation, which had exceeded the 2.0% target for four whole years through end-2013, fell to 1.7% last month from 1.9% in January.  Retail price inflation dipped 0.1 percentage points to 2.7%.  Producer output inflation slowed almost in half to a 53-month low of 0.5% in February.  Producer input prices recorded a larger 5.7% 12-month rate of decline in February.  The ONS measure of housing prices posted a smaller 0.6% on-month rise in February but a bigger on-year advance of 6.8% after climbing 5.5% in the year to January.

Dutch household spending, down 1.5% in the year to January, posted the largest on-year drop in four months.

Worriers about Chinese economic prospects got some welcome news from the Conference Board’s index of Chinese leading economic indicators, which rose by 0.9% in February.

Dollar overnight changes are narrowly mixed, with upticks of 0.3% against the yuan, 0.2% versus the Swiss franc and 0.1% relative to the euro and loonie but drops of 0.2% against the Aussie dollar and 0.1% vis-a-vis the kiwi and sterling.  Dollar/yen is unchanged from Monday’s closing level.

Share prices rose 1.0% in Taiwan but fell by 0.5% in Hong Kong, 0.4% in Indonesia and Japan, 0.3% in Singapore and 0.2% in Australia and South Korea.  Stocks in Europe show solid price gains of 1.1% in Paris, London and Frankfurt, 0.9% in Zurich, and 0.6% in Milan.

Ten-year German bund, British gilt and Japanese JGB yields remain steady.

Gold and oil prices firmed 0.3% to $1,315.60 per ounce and $99.91 per barrel of WTI crude.

Spanish producer prices notched the largest on-year decline, 2.9%, in 52 months in February.  Swedish producer prices were 0.1% higher than a year earlier in February after a 0.5% month-on-month drop.

French business sentiment printed in March at 100, same as the reading in the other two months of the first quarter.  Dutch producer sentiment improved 1.2 points to +1.1 in March, the best reading since June 2011.  Finland’s jobless rate rose 0.6 percentage points to 9.1% last month, but most of the deterioration was seasonal.  Polish retail sales were 7% higher than a year earlier in February, and the Polish jobless rate edged down 0.1 of a percentage point to 13.9%.

The British Bankers Association’s tally of U.K. mortgage approvals settled back to 47.55K in February from 49.34K in January, which had been the highest total since September 2007.  Approvals were still 53% greater than the total in February 2013.

South Africa’s index of leading economic indicators improved 0.3% in January.

Monetary officials in Hungary are meeting today.

Economic sanctions against Russia are being escalated.

Scheduled U.S. data to be released today include new home sales, the Case Shiller house price index, the FHFA house price index, consumer confidence and the Richmond Fed manufacturing index.  Lockhart, Plosser, and Bullard are among the Fed officials speaking publicly. 

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

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