Ukraine, China, Scortland and Fed Command Spotlight

September 10, 2014

A general cease fire is said to be still holding in the Ukraine despite sporadic breaches.

Chinese Premier Li made reassuring remarks that policy changes are coming to buttress growth.

The independence vote by Scots on September 18th appears close.  Opinion polls have given a slight edge to those favoring secession.

A report is circulating in the market that a change in FOMC forward guidance language is being considered.  Such speculation was triggered by a study out of the San Francisco Fed, where Yellen once served as president, that markets do not appear to be properly discounting how soon interest rates might go up.  Over the past week, the 10-year Treasury yield has risen 8 basis points.  Ten-year sovereign debt yields are up 11 basis points in Germany, 6 bps in Great Britain and 2 bps in Japan from a week ago.

The dollar strengthened 0.6% overnight against the Australian dollar, 0.3% versus the yen, and 0.1% relative to the kiwi, but the greenback has edged down 0.1% against the yuan, euro, loonie and sterling.  The Swiss franc is unchanged against the dollar but 0.1% softer versus the euro.

Share prices in the Pacific Rim fell 1.9% in Hong Kong, 1.0% in Indonesia, 0.8% in Taiwan and India, 0.6% in Australia, 0.5% in China and 0.3% in South Korea.  But Japan’s Nikkei-225 index improved 0.3%, and stock market losses in Europe were trimmed in the wake of the aforementioned remarks by the Chinese Premier to 0.5% in Spain, 0.3% in Switzerland and 0.1% in Germany.  Equities have firmed 0.2% in Italy and the U.K. and by 0.1% in France.

The British 10-year gilt yield rose 2 bps overnight.  So did the Japanese JGB.

Comex gold is up fractionally at $1,254.20 per troy ounce, while WTI oil is steady at $92.72 per barrel.

Bank of Japan Deputy Governor Iwata made public remarks endorsing the central bank’s long-held view that a moderate recovery trend remains intact, and inflation will eventually resume its rise toward the targeted 2% level.

But the 12-month rise of domestic corporate goods prices slowed to a 4-month low of 3.9% in July from 4.3% in June and 4.5% in May.  Exports prices were 0.7% lower than a year earlier, and import price inflation slowed to 0.5% from 0.9%.

Private core machinery orders in Japan rose 3.5% in July, somewhat less than forecast, and just 1.1% on year.  Foreign orders for Japanese machinery plunged 42.6% on month and climbed 4.4% on year.

Turkish real GDP fell 0.5% last quarter, halving the on-year advance to 2.1% from an upwardly revised 4.7% in the first quarter.

Australian consumer confidence dropped 4.6% in September, more than reversing a 3.8% August increase.  The decline was the first since May.

Greek harmonized consumer prices fell 1.1% on month and 0.2% between August 2013 and a year later.  Romanian CPI inflation slowed 0.1 percentage points to 0.8% in August.

Portuguese consumer prices declined in August by 0.2% from July and 0.4% from a year earlier.

Danish consumer prices dipped 0.2% last month, trimming the 12-month increase to 0.5% from 0.8%. 

Norwegian consumer prices slid 0.3% in August, depressing the on-year rate of increase by 0.1 of a percentage point to 2.1%.  Norwegian producer prices declined in August, too, falling 0.7% on month and 3.3% on year.

French industrial production did better than forecast in July but nonetheless posted only a 0.2% monthly increase and a rise of 0.1% from July 2013.

Finnish industrial production slid 0.3% on month in July and was 2.6% smaller than a year earlier. 

Spanish industrial output stagnated in July and was just 0.8% greater than in July 2013.

Canada releases quarterly capacity utilization later this morning.  Thursday brings interest rate decisions from New Zealand, Indonesia, Serbia, Peru and the Philippines, plus the release of Australian labor statistics.  Chinese money and bank lending figures are do shortly, too.

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

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