Data to Digest

October 21, 2014

Data released earlier today include Chinese GDP, retail sales, industrial production and business investment, revised Euroland deficit- and debt-GDP ratios, and Japan’s all-industry index.   U.S. existing home sales and weekly chain store sales figures are awaited.  Markets are also getting some corporate earnings reports, which have exceeded expectations. 

The dollar is unchanged overnight against the yen and yuan, up 0.3% relative to the Swiss franc and euro, down 0.3% vis-a-vis the New Zealand and Australian dollars and up 0.1% versus sterling.

Stocks in the Pacific Rim closed mixed (e.g., Japan, China, and South Korea down 2.0%, 0.9% and 0.8% but Singapore, New Zealand and India up 0.7%, 0.7%, and 0.6%),  Equities in Europe are more uniformly stronger with gains of at least 1.0% so far in Germany, France, Spain, Italy and Switzerland.  Stocks in Europe have gotten a lift from reports that the ECB has purchased Italian, French and Spanish covered bonds in the last two days.

Commodity prices strengthened.  Comex gold rose 0.5% to $1,251 per ounce.  WTI oil climbed 0.6% to $83.19 per barrel.

Greek bonds were not helped by the Ezone debt and deficit data.  The 10-year yield is 223 basis points higher than a month ago.  Greece had a deficit-to-GDP ratio of 12.2% in 2013, up from 8.6% in 2012 and highest since 2009.  The debt-to-GDP ratio climbed to 174.9% in 2013 from 156.9% in 2012 and 146.0% in 2010.  The 10-year German bund yield slid another 3 basis points overnight to 0.82%.  British and Japanese 10-year yields are up two and one basis points, by contrast.

Euroland’s government deficit-to-GDP ratio as a whole was just 2.9% in 2013, down from 3.6% in 2012, 4.1% in 2011, and 6.1% in 2010.  Debt moved up to 90.9% nonetheless from 89.0% of GDP in 2012 and 83.7% in 2010.  Among the currency unions four largest economies, the debt ratios of France (92.2%), Italy (127.9%) and Spain (92.1%) each exceeded the Euroland average in 2013.  The debt ratios of Cyprus (102.2%), Ireland (123.3%), Portugal (128.0%) and Belgium (104.6%) each exceeded the 100% threshold.  By comparison, Japan has a 240% fiscal debt ratio.

Chinese GDP rose 1.9% on quarter and 7.3% on year last quarter, a tad more than consensus expectations, but the steadiness of the data continues to stretch credulity.  On-year GDP growth over the last eleven reported quarters has ranged only between 7.3% and 7.8%.

Chinese September data were also reported.  Retail sales rose 11.6% on year, least of any month this year, less than forecast, and below the year-to-date pace of 12.0%.  Industrial production grew 8.0% in the year to September, which was more than forecast following a 6.9% on-year rise in August but nonetheless less than the 8.5% January-September on-year advance.  Fixed asset investment spending posted an on-year rise of 16.1% in January-September, down from 16.5% in January-August and 19.6% in full-2013.

Japan’s all-industry index edged down 0.1% in August after dropping by 0.4% in July.  The all-industry index in July-August, a proxy for GDP, was 0.5% smaller than the 2Q14 mean, suggesting that real GDP may have contracted for a second consecutive quarter.  The all-industry index in August was 2.5% lower than a year earlier, which is a deeper on-year drop than 1.7% recorded in July or 0.9% in the second quarter.

Britain’s public sector net borrowing excluding intervention totaled GBP 11.8 billion last month, some 16% wider than a year earlier.  The public sector net cash requirement ballooned to 17.7 billion pounds in September.

The Swiss trade surplus widened 11.4% to CHF 7.69 billion in the third quarter from CHF 6.9 billion in 2Q, but real exports were only 1.8% greater than a year earlier.  The Greek current account surplus rose 8.4% on month to EUR 1.825 billion in August.  Finnish unemployment edged up 0.1 percentage points to 8.5% on a seasonally adjusted basis in September.

Minutes from the Reserve Bank of Australia’s policy meeting of October 7 observed slower growth since midyear than desired and express a desire to see the Aussie dollar depreciate further.  No surprise there.  The Bank of England releases meeting minutes tomorrow.

South Africa’s index of leading economic indicators recovered 0.8% in August, but the index of coincident economic indicators fell just as much.  India’s indices of leading and coincident economic indicators climbed 0.9% and 1.1%, respectively, in September.

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

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