Senate Vote Fall Short of 60 Needed to Approve Keystone XL Oil Pipeline

November 19, 2014

The dollar advanced overnight by 1.0% against the Australian dollar, 0.8% versus the kiwi, 0.7% relative to the yen, and 0.4% vis-a-vis the loonie.  The dollar is unchanged against the yuan and down 0.2% relative to sterling and 0.1% against the euro and Swissie.

Equities in the Pacific Rim rose 1.2% in Taiwan, 0.6% in Singapore and 0.5% in Indonesia but fell by 0.7% in Hong Kong, 0.6% in Australia, 0.5% in India, and 0.3% in Japan.

Comex gold and WTI oil are 0.1% and 0.3% higher at $1,198.40 per ounce and $74.85 per barrel.

The 10-year JGB yield settled back three basis points to 0.47%, and the German bund is a basis point softer at 0.79%.  The 10-year gilt, in contrast, has firmed two bps to 2.14%.

The Keystone Pipeline vote fell one vote short of ending debate in the senate.  President Obama had threatened he would veto the bill.

In its first policy meeting since augmenting quantitative stimulus, the Bank of Japan Board maintained the new policy settings by a vote of 8-1 and retained the view that the economy will evolve on a moderate recovery trend and the core CPI will eventually rise to the 2% target but is stuck at around 1% for the time being.

Minutes from the Bank of England’s November policy meeting were not as dovish as anticipated.  The 7-person majority in favor of the policy status quo had very diverse views regarding Britain’s growth and inflation outlook, while Martin Weale and Ian McCafferty dissented for a fourth straight time in favoring a 25-basis point rate hike now.

The Central Bank of Chile, which had cut its key interest rate three times in 3Q14 by 25 basis points each and eight times since January 2012 by a total of 200 basis points, left the rate at 3.0%.  Inflation last month was at a 6-year high and above analyst forecasts.

FOMC Minutes will be released later today.  U.S. housing starts fell 2.8% in October but were 7.8% above the year-earlier level.  Building permits climbed 4.8% on month and 1.2% on year.

Japan’s all-industry index increased 1.0% in September but slid 0.1% in the third quarter after plunging 3.4% in 2Q.  This index is a supply-side monthly approximation of GDP growth.  The September level was 0.7% above the 3Q mean but 0.8% lower than a year earlier.

Japan’s index of leading economic indicators in September was confirmed at the preliminary reading of 105.6 following 104.4 in August and 105.5 in July.  The index of coincident economic indicators advanced 1.5 points to 109.8, a trend consistent with signaling a possible turning point.

Japanese department store sales posted a year-on-year drop of 2.2% in September, three times greater than the drop in August.  Tokyo sales were only 0.1% lower than a year before.

Construction output in the euro area slumped 1.8% in September and was a similar 1.7% lower than in September 2013.  Construction had posted sequential on-quarter declines of 1.0% in 2Q and 0.5% in 3Q.

China’s index of leading economic indicators dipped 0.1% in September and then stagnated in October, according to the MNI gauge.

The ZEW index of investor sentiment toward Switzerland improved 23.1 points to a reading of -7.6 this month.

South Korean producer prices were 0.6% lower on month and 0.7% lower on year in October.  South African CPI inflation stayed at 5.9% in October.

India’s index of leading economic indicators fell 0.3% last month, while France’s LEI went up 0.3%.  Their respective indices of coincident economic indicators dropped by 1.5% and 0.1%.

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

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