Heavier Flow of Data Releases
November 13, 2014
The dollar is narrowly mixed. Equities fell 1.4% in Australia, 0.6% in China, 0.5% in New Zealand and 0.3% in South Korea but climbed 1.1% in Japan and 0.7% in Singapore and Taiwan. In Europe, stocks are down 0.6% in Italy and 0.4% in Spain but up 0.5% in Germany and Switzerland and 0.1% in Britain.
The ten-year Japanese JGB yield fell 3 basis points and back below the 0.50% threshold, while both 10-year German bunds and British gilt yields went up a basis point.
West Texas Intermediate oil dropped another 1.1% to $76.33 per barrel. Comex gold is 0.3% firmer at $1,162 per ounce.
Three central banks announced interest rate policy decisions so far today. Still to come: Peru.
- The National Bank of Serbia’s policy interest rate was cut by 50 basis points to 8.0%. This was the third such reduction in 2014. Inflation remains below target.
- Officials at the Bank of Korea voted unanimously to keep the seven-day repo rate at 2.0%, its level since a 25-bp reduction in October 2013.
- Bank Indonesia’s 7.5% benchmark interest rate, the level since October 2013, was again retained in spite of higher inflation last month.
In other central bank news, New York Federal Reserve Bank President Dudley warned that it would be less damaging to lift the fed funds rate initially too late than too soon, and Deputy Reserve Bank of Australia Governor Kent insinuated that intervention selling of Australian dollars could be undertaken if the exchange rate continues to remain fundamentally overvalued. Finally, an ECB survey of forecasters produced lower inflation projections of 0.5% this year, 1.0% next year and 1.4% in 2016, accompanied by anemic growth forecasts of 0.8% in 2014, 1.2% in 2015 and 1.5% in 2016.
Rumors continue to swirl in Japan that Prime Minister Abe will call snap elections for next month as a step to strengthen his mandate so that he then can delay the planned October 2015 sales tax hike.
Although Japanese machinery orders rose for a fourth straight month in September and by a greater than forecast 2.9%, such was less than the 4.7% jump in August, the 5.6% increase in the third quarter unwound only half of the 10.4% plunge in 2Q. Foreign orders for Japanese machinery dropped 9.4% after soaring 29.1% in August. Foreign orders fell by 27.7% in 3Q after a 42.2% increase in 1Q.
Revised Japanese industrial production showed a slightly greater monthly advance of 2.9% in September, but production in the third quarter dropped 1.9% on top of a 3.8% decline in 2Q. The inventory/shipments ratio slumped 6.0% on month in September.
Japanese domestic corporate goods prices fell 0.8% in October, twice the monthly decline that had been expected, and this cut the 12-month increase to a 7-month low of 2.9%, notwithstanding the 3-percentage point sales tax hike implemented last April.
Japanese stock and bond transactions last week generated a JPY 1.171 trillion capital inflow versus only JPY 212 billion in the final week of October.
China reported some disappointing data, highlighting the possibility that growth may be trending below the government’s desired path.
- Industrial production was 7.7% greater than a year earlier in October, down from 8.0% in September and 9.1% in June-July. The slowdown depressed the year-to-date increase to 8.4%.
- Retail sales rose 11.5% on year in October, down from 11.6% in September, 12.3% in June-July and an year-to-date pace of 12.0%.
- The year-to-date increase in fixed asset investment decelerated to 15.9% in October from 16.1% in September17.2% in June-July and 19.6% in full-2013.
In New Zealand, food prices stagnated in October but were 0.9% higher than a year before. Consumer confidence slumped another 1.3% in November to a 14-month low. The business purchasing managers index improved 0.8 points to 59.3 in October, signaling a faster rate of expansion, and house prices posted increases of 1.4% on month and 3.9% on year in October.
In Australia, expected inflation over the coming year accelerated sharply to 4.1%, a 6-month high, from 3.4%.
September current account figures were released in France, a deficit of EUR 1.2 billion after a EUR 3.7 billion shortfall in August, Turkey — a $2.22 billion deficit after $2.15 billion the month before — and the Czech Republic (a deficit of CZK 21.1 billion versus -CZK 15.5 billion in August).
German CPI inflation in October was confirmed at the flash indication, which was a drop of 0.3% on month and an on-year rise of 0.8% for the fourth straight month. Energy prices were 2.3% lower than a year ago. All other prices collectively went up 1.1%.
Italian consumer prices edged up 0.1% both on month and on year in October. Spanish consumer prices slid 0.1% in the year to October, while French consumer prices firmed by 0.4%. Irish consumer prices were 0.2% higher on year. The Swiss PPI/import price index declined 1.1% between October 2013 and October 2014.
Dutch retail sales in September were at the same level as a year before. South African wholesale turnover rose 1.7% on month and 5.9% on year.
U.S. jobless insurance claims climbed 12K last week to 290K. The 4-week average level remained comfortably south of 300K at 285K. Still to come: the Labor Department’s JOLTS index that explores reasons for job leavings and compares such to job openings. Fed Chair Yellen has mentioned this data as one of the indices that’s being monitored closely for a fuller view of labor market conditions.
Copyright 2014, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Aussie dollar, German CPI, Japanese industrial production
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