U.S. Heading for Thanksgiving Day Break

November 26, 2014

Before U.S. markets close early today, a load of U.S. data were released including several downside surprises.

  • New jobless insurance claims jumped 21K last week to 313K, and that boosted the 4-week average rise by 6.25K to 294K.
  • The U. Michigan/Reuters gauge of consumer sentiment in November got revised downward to 88.8 from 89.4 reported initially and was 0.6 points below October’s reading.
  • Pending home sales dropped 1.1% in October, trimming the 12-month rate of rise to 2.2% from 3.4%.
  • New home sales rose 0.7% in October to 458K from 455K in September and were 1.8% above their year-earlier level.
  • The Chicago regional manufacturing purchasing managers index printed at a weaker-than-forecast 60.8 in November after 66.2 in October.
  • Mortgage applications fell 4.3% last week despite a 3-basis point dip to 4.15% in the 30-year fixed mortgage rate.
  • Durable goods orders only recovered 0.4% in October following a 18.3% plunge in August and a 0.9% drop in September.  Nondefense orders, excluding aircraft, declined by 1.3% on month for a second time in a row.
  • A 0.2% rise in personal income was half as much as expected in October.  Personal spending also rose 0.2% following a downwardly revised zero changein September. 
  • The core personal spending price deflator’s 12-month rate of rise accelerated to 1.6% in October from 1.5% the month before.  The total PCE deflator’s inflation rate remained at 1.4%, and the savings rate stayed at 5.0%.

The U.S. dollar traded up 0.8% against the Australian currency and 0.4% higher versus the kiwi but otherwise shows overnight losses of 0.4% vis-a-vis the loonie, 0.3% against the euro and Swissie, and 0.1% relative to the yuan and sterling. The yen is unchanged and hugging close to 118.0 per dollar.

The recovery of Chinese equities triggered by that economy’s easing of monetary policy was extended by a further 1.4%.  In other equity markets around the Pacific Rim, stocks rose 1.1% in Hong Kong, 1.2% in Australia, but only 0.2% in India and 0.3% in Indonesia and New Zealand.  Japan’s Nikkei dipped 0.1%.  In Europe, the German Dax has risen 0.3% but share prices are down 0.4% in Spain and Italy, 0.2% in France, and 0.1% in London.  U.S. stocks are generally flat heading into the holiday.

Sovereign debt yields are lower.  The 30-year Treasury of 2.95% has an unfamiliar two-handle, and the British 10-year gilt of 1.99% has an equally strange-looking one-handle.  The 10-year Japanese JGB fell two more basis points to 0.43%, and the bund is below 0.75%.

OPEC holds a biannual summit in Vienna tomorrow.  WTI oil is off another 0.6% at $73.63 per barrel.

Gold ($1,198 per ounce) is unchanged in value.

German import prices dropped 0.3% on month in October, less than forecast, and 1.2% on year.  The price of imported energy plunged 11.3% on year, while other import prices collectively went up by 0.6%. 

Italian consumer confidence slumped 1.1 points to a 9-month low of 100.2 in November.

French consumer sentiment, in contrast, increased by a greater-than-forecast two points to an 8-month high of 87 in November.

Swedish consumer confidence weakened 0.8% to 96.8, but business sentiment of 108.0, 0.6% above the month before.  The Swedish trade balance unexpectedly swung from a SEK 1.7 billion surplus in September to a SEK 0.2 billion deficit last month.

British GDP growth in 3Q was confirmed at 0.7% on quarter.  This matches the preliminary estimate and growth in 1Q14 but was less than the second quarter’s 0.9%.  On-year growth was 3.0%.  Between 2Q and 3Q, consumption rose 0.8%, public spending increased 1.1%, but business investment and exports respectively dropped by 0.7% and 0.4%.

The CBI’s monthly survey of distributive trends in Britain weakened four points to a reading of 27 in November.

Japanese small business sentiment rose to a reading of 47.7 this month from 47.4 in October.

A member of the Bank of Japan Board, Sayuri Shirai, gave a talk in which she defended the augmentation of quantitative easing as necessary to achieve the 2% inflation goal.

Construction completions in Australia fell 2.2% last quarter.

Singaporean industrial output only rebounded 0.2% in October from a 1.0% drop in September, and the 12-month 2.6% rise was smaller than forecast.

Chinese consumer confidence declined 0.9 points to a reading of 110.0 in November, and South Korean consumer sentiment this month dropped two points to a 14-month low of 103.

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

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