Flurry of U.S. Data Awaited and More Central Bank Decisions Announced

September 12, 2014

U.S. retail sales, import prices and the U. Michigan consumer sentiment index get released today.

The Central Bank of Chile cut its overnight interest rate by 25 basis points to 3.25% but express less certainty about more easing.  Previous 25-bp cuts were made in August, July, March, February, November and October.

Peru’s central bank also lowered its key interest rate by 25 basis points while discouraging speculation of a continuing easing trend.

The Bank of Korea retained a repo rate of 2.25%, which is a four-year low.  The rate was previously cut to 2.25% in mid-August.  Before that there were reductions made in May 2013 and November 2012.

The Central Bank of Russia did not raise its 8% key interest rate further in spite of downward pressure on the ruble, which hit a record low against the dollar.  The interest rate had been at 5.5% before hikes of 150 basis points last March and 50 bps each in April and July.

The dollar is narrowly mixed, with overnight gains of 0.4% against the Australian dollar and 0.1% versus the yen, kiwi and yuan, no change relative to the loonie, and dips of 0.1% vis-a-vis the euro, Swiss franc and sterling.

In stock market action in the Pacific Rim, equities fell 1.1% in Taiwan, 0.7% in New Zealand and 0.3% in Hong Kong and Australia but rose 0.6% in China, 0.4% in South Korea, 0.3% in Japan and 0.2% in India and Indonesia.  European trading thus far today has lifted stocks by 0.3% in Spain and 0.2% in Italy and the U.K. but depressed the German Dax by 0.2% and the Paris Cac by 0.1%.

Sovereign debt yields continued to drift higher, with the 10-year German bund and British gilt up two basis points and the 10-year JGB up a single basis point.

Comex gold is steady at $1,238.70 per ounce.  WTI oil has risen 0.3% to $93.14 per barrel.

Japanese industrial production growth in July was revised to 0.4% from 0.2% reported earlier.  Output was still 0.7% lower than a year before and 1.6% below the 2Q average.  Capacity usage fell 0.8%, and capacity dipped 0.1%.

Industrial production in the euro area advanced 1.0% in July following declines in both May and June.  Output was 2.6% above its year-earlier level and 0.5% greater than the mean in 2Q14.  Portuguese, Spanish, Austrian and German output showed on-year gains of 1.6%, 1.0%, 1.1% and 0.8%, while Finnish, Cypriot and Greek production were down by 0.7%, 1.4%, and 0.5% compared to levels in July 2013.

Jobs in the euro area went up 0.2% on quarter and 0.4% on year during the second quarter of 2014.

German wholesale prices fell 0.2% on month and 0.6% on year in August.  Oil products posted a price drop of 1.0% from July and 3.5% from a year earlier.

Britain’s index of leading economic indicators edged up 0.1% in July, while the index of coincident economic indicators stagnated.  Construction output in the U.K. was unchanged in July, halving the 12-month rate of increase to 2.6%.

The French current account deficit of EUR 2.2 billion in July was considerably smaller than forecast.  Italian industrial output fell 1.0% on month and 1.8% on year during July.

Italian consumer prices dipped 0.1% in the year to August, while Spanish consumer prices fell by 0.5% over the same statement year.

ECB President Draghi and BOJ Governor Kuroda each spoke publicly today.

  • Draghi urged Ezone governments to enact more investment-promoting measures such as deregulation.
  • Kuroda told Prime Minister Abe that the Bank of Japan will not hesitate to stimulate further if needed and has the wherewithal to do so.

New Zealand’s business purchasing managers index improved sharply to a reading of 56.5 in August from an upwardly-revised 53.5 score in July and 53.4 in June.  The PMI has been 50 or better for 21 straight months.  New Zealand food prices rose 0.3% on month and 0.7% on year in August.

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

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